The opposite of “overbought,” oversold refers to a security that is trading at a lower price and has the potential to bounce back. Oversold conditions don’t necessarily mean that a bounce-back is imminent, however. They can last for a long time, so smart traders will wait for the price to bottom out and begin an upward movement before buying or investing. There are many technical indicators that reflect oversold conditions, like the relative strength index (RSI) and stochastic oscillator. However, since traders, analysts, and investors all use different tools to predict future movements, oversold is a subjective term.