V.5:7 (231-232): Forecasting the market with the overbought/oversold indicator by Steven B. Achelis
Product Description
Forecasting the market with the overbought/oversold indicator by Steven B. Achelis
The terms "overbought" and "oversold" are often used to discuss market conditions. However, as anyone who has placed a short trade simply on the basis that the market is overbought knows, the market can remain overbought for long periods of time.
There are a number of indicators which can be used to quantify overbought/oversold (OB/OS) conditions. Most methods deal with internal momentum as measured by changes in price. Popular price OB/OS indicators include the rate-of-change of prices (expressed in either points or percentages) and the difference between two moving averages (often referred to as MACD).
The terms "overbought" and "oversold" are often used to discuss market conditions. However, as anyone who has placed a short trade simply on the basis that the market is overbought knows, the market can remain overbought for long periods of time.
There are a number of indicators which can be used to quantify overbought/oversold (OB/OS) conditions. Most methods deal with internal momentum as measured by changes in price. Popular price OB/OS indicators include the rate-of-change of prices (expressed in either points or percentages) and the difference between two moving averages (often referred to as MACD).
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