How can something be overbought or oversold

Beginner Questions
1

Hi guys,

Just want to know, how can something be overbought or oversold - because for something to be sold, someone has to to buy it correct ?

Thank you

2

I think I understood.

If something is overbought, it means the market price is higher than what it should be as per the fundamentals.

Where as, oversold means it means the market price is higher than what it should be as per the fundamentals.

Please correct this if this is wrong

Thank you

3

The overbought and oversold game plays with respect to demand and supply of the instrument. The overbought here defines that as the prices are rising the demand for that instrument has fallen down. i.e. the bulls fight have slow down than before. Similarly for oversold conditions, it means that that there is very high subscription at low prices, thus further fall is less expected.
Hope i could clear your doubts here
Please feel free to reply back

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4

Well, In shares it could be known as buying above face value and buying below face value.

5

There is no such thing as overbought and oversold. You can trick yourself into saying that a certain price is ‘value’ or whatever, but price is always right.

6

Well, according to Investopedia.com it says:

“A situation in which the demand for a certain asset unjustifiably pushes the price of an underlying asset to levels that do not support the fundamentals.”

7

I generally think of overbought (oversold) as a point where there has been so much buying (selling) that there aren’t that many players left able to buy (sell) and keep the price moving up (down). I do not relate it to fundamentals, though it may tie in with an over/under-valued situation at times.