Oversold / Overbought

Oversold and overbought describe when a stock's price has moved to an extreme—either too low or too high—based on recent trading activity. You'll see these terms in technical analysis (studying price charts and trading patterns) because traders use them to spot potential turning points. When a stock is oversold, it's dropped sharply and might be due for a bounce back up. When it's overbought, it's risen sharply and could be ready to pull back down. Think of it like a rubber band: pull it too far in one direction and it's likely to snap back. For example, if TechCorp stock plummeted 20% in a week on no real news, traders might call it oversold and bet on a recovery.