Jgodina1
Education

Simple Way to Read Oversold/Overbought Without RSI

FX:EURUSD   Euro / U.S. Dollar
This is how u can tell if a market is oversold (or overbought) by reading price and using our little 14EMA friend
After price has a large push down (or up) like you can see in the yellow circles, it retraces up to the green circles

In example 1, this yellow circle was right on the close of a huge bearish 4h engulfing . Perfect example to see how it is oversold by seeing the large gap between price and the 14 cyan coloured EMA

And the following day we see this happen again in example 2. price pushes fast away from the 14EMA and therefore it needs to breath and retrace a little. No body can continuously sprint , neither can markets! "After big drop , markets must chop"

Whether or not you have RSI on the charts, it is good to know when a market is oversold or overbought because nobody likes entering and seeing the trade go immediately negative, only to see it later where you thought after you closed in a loss

Another cool term for a temporary up trend in an overall down trend is a dead cat bounce! This is a very very short term version considering we are looking at the 15m tf here
~ The trend is your friend and so are retracements ~

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