From InvestorWords.com
bollinger bands
A technical analysis technique in which lines are plotted two standard deviations above and below a moving average, and at the moving average itself. Because standard deviation measures volatility, these bands will be wider during increased volatility and narrower during decreased volatility. Some technical analysts consider a market which approaches the upper band to be overbought, and a market which approaches the lower band to be oversold.
So, what is the difference between something being overbought and oversold?
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Technical analysis is the act of
"TRYING" to predict future stock price movement with charts and graphs. Good Luck!
Overbought/oversold means that the stock has been purchased/sold heavily by institutional and individual investors. When this happens the stock price moves up more than normal and Techiees say that the stock is overbought/oversold.
The core of the entire market system is money. Therefore, earnings are the key to stock price appreciation.
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