MOMENTUM
Momentum is a measure of how far a market has moved in a particular period of time.
Momentum is not the same as volatility.
A security or market could be very volatile, but if it ends up in the same place that it started in the given time period the momentum would be neutral.
Stocks and other securities usually stay within their typical or normal trading ranges.
Overbought means a market is trading at an extreme above what would be its usual or typical trading range.
Oversold means a market is trading at an extreme below what would be its usual or typical trading range.
When a market is overbought or oversold, there is a good chance that it reverses back into its average range.
This can draw traders into the market because they will be expecting a reversal.
Overbought and oversold conditions are an illustration of market psychology.
Overbought shows extreme bullishness and oversold extreme bearishness
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