What is the meaning of oversold or overbought ?

What does it mean when you say "oversold" or "overbought"? how can I know if a currency is in this situation, and what should I do after I find out?Thanks!

oversold and overbought are just technical descriptions of market action based of some indicators...don't take it too seriously...

this article might explain it...

http://www.dailyfx.com/forex/educati..._Oversold.html

Thank you ! That was a very good way to explain !

It's a way of trying to make reality fit in with expectations.

"Oversold" and "overbought" are artificial concepts constructed from technical analysis parameters (particularly those raised by so-called "oscillators" like "stochastics").

These terms are conceptually perhaps on a par with such sentiments as "If the facts don't fit the theory, change the facts", in that they're a sign of beliefs being respected as if they were realities. (That's true of quite a few things, in forex trading, really, isn't it? ).

From oscillating indicators being higher than they might be (in the case of "overbought"), compared with price movements.

Enter short positions (in the case of "overbought"), if you believe that they have any predictive value.