Term

Overbought

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When an instrument is said to be overbought, this basically means that market is over extended and one should expect either a reversal of that move or a retracement. When the market rallies up and get exhausts its momentum it has to retrace back/ downwards to regain its strength. Oscillators are the most used indicators to determine this phenomenon. Please visit stochastics strategies for information on how to trade an overbought market.

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