What is Oversold?

Oversold is a subjective term that refers to an asset that has recently traded at a reduced price relative to its perceived potential for a near-term bounce or price increase. However, an oversold price condition can last for a substantial amount of time, meaning that an immediate price increase is not always the result in the short-term. Technical indicators are one of the main methodologies used to identify oversold or overbought assets by using data from many metrics such as relative strength index (RSI), Bollinger Bands, trading volume, and other metrics.