Overbought and Oversold: Overbalance Indicators
Overbought and oversold areas are market phases in which the indicator is above or below a certain range of values. It is believed that if the RSI is higher than 70, then the market is oversold, and if it is lower than 30, it is overbought.
One should bear in mind that in the overbought or oversold zone, the chart may stay for quite a time. Also, the movement of the graph from any zone does not guarantee its movement in the opposite direction.
Trend movements are usually accompanied by kickbacks, or counter-trend movements, the range of which is several times smaller than the range of the trend itself. Often, traders make mistakes by accepting kickbacks as the beginning of a trend change. More on Medium