One: In this case, according to the anti-popular psychology, investors should sell stocks in reverse at this time. Investors can analyze whether individual stocks enter the overbought area according to the interval of kdj indicators. When the value range of K, D and J is above 80, it is an overbought area, which is a selling signal, that is, kdj enters the overbought area, which means that many forces have become extremely strong and face the risk of insufficient follow-up forces, and there is not much room for the stock price to continue to rise. On the contrary, once the multi-party forces weaken slightly, the stock price will continue to be suppressed by the short side, which is a bearish signal that investors can clear their positions in the overbought area.
Two: When the values of K, D and J are below 20, it is an oversold area, which is a buying signal, indicating that the short-term strength has become stronger and there is a risk of insufficient follow-up strength. There is not much room for the stock price to continue to fall. Once multiple forces recover, the stock price may continue to rise, which is a bullish signal, and investors can open positions in oversold areas.
One: overbought means that the price is easy to be revised downward; Oversold is a technical analysis term, which means that the price of securities may rise in the near future after falling sharply.
Two: overbought and oversold (OBOS) is an analytical tool to measure the general momentum. Calculate the sum of the number of stocks that rose in N days, and then calculate the sum of the number of stocks that fell in these days. After subtraction, the OBOS value is obtained. In the stock market, due to the spread of some news, investors reacted strongly to the market or individual stocks, which caused the stock market or individual stocks to rise or fall excessively, so the phenomenon of overbought and oversold appeared.
Three: the so-called extremes meet. After overbought, the stock price is unacceptably high, and as a result, the stock price will turn around and fall. Similarly, after the oversold, the stock price deviates greatly from its reasonable value and becomes very cheap, which will eventually attract some knowledgeable people to take advantage of the low price to absorb. According to the theory of supply and demand in economics, the reasonable value of stocks is determined by the relationship between supply and demand in the market. But sometimes, for some reasons, short-term large demand or large supply suddenly appears in the market, which will lead to excessive overbought or oversold of stocks. However, overbought or overbought market conditions will not last long. Some investment strategies are to make opposite trading decisions when the market is overbought or overbought, so as to achieve the purpose of making profits. To judge whether the market is overbought or oversold, you can refer to the technical analysis data of the strength index (RSI): if RSI is greater than 80, it means that the market is overbought; If RSI is less than 20, the market is oversold.