Oversold

[Biker]

Can anyone please explain to me what this means, how it will affect a share, and how will i know if a share is oversold.

[CE]

Overbought - An opinion as to price levels. May refer to a security that has had a sharp rise or to the market as a whole after a period of vigorous buying which, it may be argued, has left prices "too high." Oversold - The reverse of overbought. A single security or a market which, it is believed, has declined to an unreasonable level. Go to www.google.com and type "define:oversold", enyoy..

[#3]

Biker, I don't know if this will be much help, but here's a purely technical explanation from the help files on the SW I use:

In their analysis of charts using moving averages, technical analysts observed that in most cases the very best place to buy a share was where the gap between the price line and its moving average was at its greatest and vice versa. This led to the development of the Overbought/Oversold indicator.
The Ob/Os indicator is an oscillator derived from the moving average. It expresses the gap between the MA (moving average) and the price line as a percentage of the moving average, according to the following formula:

Ob/Os = (Price - MA) / MA x 100

Where MA is the Moving Average

You will perceive that where the price is greater than the MA (which occurs when the price is going up), the result of the above formula will be a positive number; conversely, where the price is smaller than the MA, the result will be negative. The more positive the number, the more overbought the stock is; and the more negative, the more oversold.

[CE]

Thanks AvS, any spesific calculator that you can recommend ?

[#5]

LOL! I'd recommend a Sharp calculator rather than Casio :) Technical indicators like RSI, Stochastics, MFI, IMI etc. are also used to determine whether a share is oversold / overbought.

[CE]

....just joking bro