"Netflix and Amazon recently tagged as 'most oversold' — price dropped too far? Oversold means potential bounce, but confirmation is key."
🔴 3 pillars of oversold detection
① RSI below 30
Relative Strength Index drops under 30 = oversold territory. BULLISH DIVERGENCE when price makes lower low but RSI forms higher low.
Example: NFLX RSI 28, price -5% but RSI higher than last low.
② Volume shrinkage
Price declines on decreasing volume = selling pressure drying up. RSI oversold + low volume = higher probability bounce.
volume oscillator can help
③ Moving average support
Price far below short-term MA (e.g., 20) but touching long-term MA (200). Long-term MA often acts as strong support.
⚡ Combine them
RSI(14) < 30 + volume 20% below average = watch
Price near 200 SMA + bullish divergence = higher probability
Avoid single indicators: they lie; multi-confirmation wins
"Don't chase the top! Wait for pullback to support levels."
📉 200-day moving average often acts as springboard.
⚠️ avoid fake signals
False oversold – in strong downtrend RSI can stay below 30 for long. Always check volume and context.
Combine with support – horizontal levels, previous pivots.
📢 EDUCATIONAL PURPOSE ONLY
This content does not offer financial advice. Technical indicators are based on historical data and do not guarantee future results. Always conduct your own analysis. US stocks involve risk. HaloEquityX.