Determining Overbought & Oversold Conditions

The most important thing to know about a market is if it is overbought or oversold. It is universally accepted that you want to buy low and sell high.

Determining Overbought & Oversold Conditions

You want to be a buyer when the market is oversold and seller when the market is high. Our simple calculator is based on pivot points. You enter the price information based on the time frame you are trading. Long term trades might use the price data from the high, low close of the previous year. A short term trade may use the previous months or weeks close depending on your trading style. The time period is determined on the time frame of your trade. What is oversold on a yearly time frame may not be on a monthy time frame.

The presented Overbought and Oversold Calculator will generate overbought and oversold price levels. Simply fill the form below with price data from a previous a time period and press the "Calculate" button:

Buy When Market is Oversold or Extreme

Sell When Market is Overbought or Extreme

The rules to calculate pivots to determine overbought and oversold levels are based on the formula below:

Pivot (P) = (H + L + C) / 3

Resistance (R1) = (2 X P) - L

R2 = P + H - L

R3 = H + 2 X (P - L)

Support (S1) = (2 X P) - H

S2 = P - H + L

S3 = L - 2 X (H - P)