Definition:
Oversold refers to a condition where a cryptocurrency is trading at a price below its values price. During oversold conditions, the asset has the potential to bounce (increase in price).
The duration of an oversold condition can vary significantly depending on the market. Therefore, if a cryptocurrency is oversold, it does not necessarily mean that a rally or uptrend will occur soon.
Explanation:
Oversold is a subjective term since the value of a cryptocurrency depends on the investor or analyst. While some traders may determine that an asset is oversold, other traders may determine that the price of the asset still has further to fall.
Technical analysts use several tools and indicators to establish whether a cryptocurrency is oversold. Fundamental analysts, on the other hand, use various assessment techniques to determine if a cryptocurrency is trading below its value metrics.
Oversold conditions may be the result of several factors, including weak market outlook, bad news regarding a blockchain company, cyber-attacks, rumors, or other unfavorable events.
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