DislikedTheir is no true meaning of overbought/oversold in forex. It's a myth... If a currency is strong and rising and the buyers stop buying. What happens? It drops.. Doesn't mean it was overbought. How can there be an overbought USD.. There is an unlimited supply (Nearly) - If the buyers stop buying it then it drops.. Sort of supply and demand.. There is no way to tell when a currency is overbought or oversold as it doesn't exist.. Take the EUR/USD last Friday. It was rising and rising strong.... Then it dropped.. WHY? Was it overbought? NO. The buyers...Ignored
I think the whole overbought/oversold thing not being logical is a result of :
a) traders collecting quotes and passing them to each other, without even trying to understand them
b) translation
c) the trading educators leveraging on the problems above
The word "over" is a preposition.
Which most understand as an end of something.
As in - "The holidays are over". Meaning the holidays finished,ended,etc.
However there is a second connotation which is less popular:
"His flat was over the shop" = at a higher level or layer than
"Over him is the financial director" = higher in rank than
"I'd choose the well-known brand over that one" = expressing preference.
And take a look at the origin of the word, dosen`t OverSold in this content give a clear indication of an Uber Bearish Trend ?
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