|
Ovebought Under the overbought market, index or stock we understand the condition when following a phase where the market has seen prices increase which coincides with a big Bullish Volume surge or big Bullish Volume Accumulation we start to see decrease in the volume accumulation.
In general big Bullish Volume indicates that a large number of high-priced shares are being transferred (i.e., distributed) from one group of market participants to another. Following the surge, which uses up a lot of buying power, the number of those buyers willing to keep buying at these high (-inflated) prices becomes exhausted and the market, index or stock becomes "overbought". Buyers are no longer willing to pay up (i.e., bid up / buy at the ask) - the market has reached a critical point where it is vulnerable to a trend reversal down. |