Can you explain the whole overbought calculations? I'm still new to trading, so I'm learning.
Does the overbought situation account for the downwards selling pressure for over a year?
Overbought conditions usually detected using oscillators. The most known oscillator is Relative Strength Index (RSI). It is overbought >70 and oversold <30.
Daily RSI is at 2 years high, almost at 2013 bubble value.
Next one is Slow Stohastic (SS). Same as RSI (70/30).
Next ADX. Overbought or oversold >40 depending on what greater +Dl or -Dl.
All of those are close to 2013 top values.
The question now is if BTC is going to continue to range at a price 70% below the all time high 2 years ago, or if the bear market is finally over, 2 years of coiled spring price compression is going to explode, and we are entering a new trend.
If new trend, need to switch to trend/momentum indicators. Because Oscillators, as we saw in 2011 and 2013, can stay MaxOverbought for months and are not useful in that case.
"Wyckoff discovered during this observation period was that when the market began to flatten out after a long decline this would usually lead to an
upward trend for the market." - How Legendary Traders Made Millions