Oversold
A description of an oscillator reading below a conventional lower threshold, such as RSI below 30.
How it is identified
Test: oscillator value falls below its conventional lower threshold, typically 30 for RSI or 20 for stochastics
Unit
qualitative
In depth
As with overbought, the term describes a calculation and not a valuation: oversold means recent losses have outweighed recent gains by a set ratio, which is simply what a falling security produces. Buying on oversold readings during a sustained decline is one of the most reliable ways to accumulate losses, because the reading can stay depressed for as long as the fall lasts. The threshold is convention, and it is routinely adjusted to 20 or 40 by practitioners depending on conditions — an adjustment that concedes the level has no fixed meaning. Nothing here suggests an oversold reading is a reason to buy.
Worked example
RSI at 24 means average losses have been roughly three times average gains over the window. A stock falling from ₹560 to ₹380 can print sub-30 readings on eight separate occasions on the way down.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Oversold” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.