how to find overbought or oversold conditions in chart

To find overbought or oversold conditions in a chart, traders often use technical indicators. Here are a few commonly used indicators to identify overbought or oversold conditions:

  • Relative Strength Index (RSI): RSI is a popular indicator used to identify overbought and oversold conditions. It ranges from 0 to 100 and when the RSI is above 70, it is considered overbought, and when the RSI is below 30, it is considered oversold.
  • Stochastic Oscillator: The stochastic oscillator is another popular indicator used to identify overbought and oversold conditions. It ranges from 0 to 100 and when the oscillator is above 80, it is considered overbought, and when the oscillator is below 20, it is considered oversold.
  • Commodity Channel Index (CCI): The CCI is a momentum indicator that can be used to identify overbought and oversold conditions. When the CCI is above 100, it is considered overbought, and when the CCI is below -100, it is considered oversold.
  • Moving Average Convergence Divergence (MACD): The MACD is a trend-following indicator that can also be used to identify overbought and oversold conditions. When the MACD line moves significantly above or below the signal line, it can signal an overbought or oversold condition.

It's important to note that overbought and oversold conditions are not necessarily signals to buy or sell, but rather indications of potential price exhaustion. It's recommended to use these indicators in conjunction with other technical analysis tools and market fundamentals to make informed trading decisions.

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