At the bottom of the chart, the RSI, on a scale of 0-100, indicates that the overbought position is at 70 and the oversold position is at 30.
In summary, the means by which traders can filter out most bad trades involves an intimate knowledge of overbought and oversold conditions.
Rather than playing the fool's game of trying to predict an exact market top, do the sensible thing and short the stocks when TRIN falls below its overbought level - a negative reversal is near.
The supply line is the top line of the triangle and represents the overbought side of the market, when investors are going out taking profits with them.
If the RSI rises above 80, it may be indicating an overbought condition, which is a sell signal; below 20 it may be indicating an oversold stock, indicating a buy signal.
When it is used as an oscillator, a positive value indicates an overbought market while a negative value indicates an oversold market.
A large positive risk-reversal number implies an overbought situation, while a large negative risk-reversal number implies an oversold situation.
The display is formatted so it better shows the overbought and oversold situations of this issue.
In any extreme situation investors forget to be selective, and this is common to overbought and oversold markets.
Many traders use them primarily to determine overbought and oversold levels, selling when price touches the upper Bollinger band and buying when it hits the lower Bollinger band.