OB & OS

OVER  BOUGHT & OVER SOLD
Over Bought & over sold it’s a situation where price is no longer able to continue the trend, because the price was too expensive or too cheap, in contrast with the support and resistance which is a psychological level which is basically just an unofficial agreement among fellow traders, over-Bought & over sold is a real state of the commonplace and the market place, if a rising trend is happening, then in these circumstances the currency becomes more expensive than usual, for example: we find a chart of GBP / USD is rising up, then that means the price of GBP is more expensive than the price in USD , and market participants will continue to hunt GBP in the hope prices will continue rising, and they still have sufficient capital to conduct action buy them, but there will be a point where buyers no longer possible to buy the GBP because the price was too expensive, things like this is called point overbought (OB), conversely when the downtrend is going on, there will be a point where prices will stop down due to selling price was too cheap, so the seller is no longer possible to sell its currency because it will lose money, this is called oversold (OS), price reaches a point in a state of OB & OS then the expected price trend will reverse direction and would soon cease, OB & OS also often occur at the point of support & resistance because indeed they are the points that are the same: a trend counter, but not always the case, because buy and sell decisions will be very supportive if the prices are not at this extreme point
The easiest way to determine the point OB & OS is to use the oscillator-type indicators such as RSI or stochastic, because this indicator was designed to determine the point OB & OS example: using the stochastic oscillator indicator, the stochastic, OB area occurs when the value of the stochastic at the level above 80 and OS occurs when the value of the stochastic at the level below 20, when prices go down and then touched the oversold area then the price will go up, because the price was too cheap to sell, the same situation also occurred in the overbought area, taking into account OB & OS we can predict when a trend will end and replaced with the next trend, thus we can set the time of opening a position for the better