A harsh drop that makes price temporarily cheap, a candidate for a bounce. Sometimes mislabeled as selling exhaustion; the platform's term is Oversold.
What the label means
Oversold (Oversold) is the opposite side: the latest downward momentum has gone beyond its usual range · relative strength below 30–35, for example. It describes a push that is stretched to the downside. It is not a certificate of cheapness or a promise of a bounce.
The falling knife
The most dangerous sentence in trading: “It fell so much that it has to bounce.” In real crashes, indicators stay deep in oversold territory for weeks while price keeps going · every bankrupt company passed through oversold on the way to zero. A statistical description doesn't stop a falling knife.
When it becomes a possible opportunity
With supporting context: oversold at a structural support that holds (a huge put wall) in a stock with a healthy story, with selling volume drying up and upward momentum divergence (a new low on higher momentum). Then it turns from a number into a testable hypothesis with a clear stop.
Hypothetical example
A market correction drags a strong stock 22% down to its quarterly put wall, its relative strength reads 24, then it makes a second, lower low on higher momentum and lighter volume: this meeting of witnesses is what separates selection from catching knives.
Common mistake
Averaging down on “oversold” with no invalidation plan: without a level that says “the thesis failed”, selection turns into a marriage to the loser.
Where to see it on the platform
The stock scanner sorts the “Oversold” state with a dedicated filter, and the gamma panel shows whether there is structural support underneath to back the thesis.
Why it isn't a buy order
In a strong decline the reading can stay in oversold territory for weeks · and whoever bought at the first touch bought the middle of the road. It helps more to read the regime range: a break below the asset's usual floor says the regime itself has changed, a heavier signal than touching a threshold.
Where to see it on the platform
The scanner terminal shows the momentum reading with the market regime, so the threshold is never read in isolation.
