very simple - OVERBOUGHT & OVERSOLD when used in the RIGHT way...

very simple - OVERBOUGHT & OVERSOLD when used in the RIGHT way indicate the status AT THAT VERY INSTANCE relative to the last few days of the past - it is NOT a long term view... the Rate Of Change is denoted here NOT the complete journey ... if a stock shows OVERBOUGHT, it is not a sign of the end of that bull run, it means that the rate of improvements MAY see some brakes being employed (for a few days before it returns back to the norm - agian not back to the previous 5-6c range)...



also, any further good/bad news will over ride any such overbought/ oversold signals - so if a huge piece of good news is dropped tomorrow, it can give us another 10c run on top of this even though it may show extreme overbought in that case... same for bad news in a down trend....

99% of people who use charts would not know this basic explanation of over bought / over sold and use it loosely and hence it creates the wrong impression in the minds of non TA users to interpret it wrongly...