Overbought and Oversold
Also called: overbought, oversold, extreme readings
Overbought and oversold describe an indicator reading at an extreme, implying a move has gone too far too fast. The words imply a judgement the data doesn't support: an overbought market is one that has been rising strongly, which in a trend is a reason to stay long rather than to sell. They are mean-reversion signals and they fail exactly when trends are strongest.