June 14, 2010
When Is A Currency Pair Really Oversold?
The trouble with technical indicators, and oscillating indicators in particular, is that although they can tell you when a currency pair is overbought or oversold, they can never be relied on with any great confidence.
For example the RSI and Stochastic indicators could go under 20 and indicate an oversold position, but that does not necessarily mean that you should jump in with a long position. The price could easily keep on falling, and these indicators could stay oversold for many weeks or months.
This is exactly what Adam Hewison, the co-creator of Marketclub, talks about in his latest trading video with regards to the EUR/USD pair. He also goes on to discuss where this pair may be headed in the future and why the recent upwards move may only be a short-term relief rally.
If you would like to watch this short 3 minute video for yourself, you can do so by clicking here.