# Overbought/Oversold Indicator

The Over bought/Oversold Indicator consists of an Exponential Moving Average of the daily market breadth.The Overbought/Oversold market breadth indicator is typically used as an oscillator.

# Overbought/Oversold Indicator

The **Overbought/Oversold Indicator** consists of an Exponential Moving Average of the daily market breadth.

## Overbought/Oversold Indicator Calculation

** Overbought/Oversold Indicator = EMA(#Advances - #Declines)**

** where:**

**EMA**is the Exponential Moving Average**#Advances**is number of advancing stocks**#Declines**is number of declining stocks

## Application of Overbought/Oversold Indicator

The Overbought/Oversold market breadth indicator shows the market as being overbought at +200 or greater and oversold at -200 or less. Note that this indicator is not particularly good at predicting when the trend will change.