Identify Market Peaks and Troughs with Our Overbought/Oversold Analysis Tool

  • Overbought vs. Oversold: How to Navigate Market Extremes Effectively
  • Forecaster Advanced DPO: How This Proprietary Indicator Helps You Spot Market Trends
  • Market Mood Meter Explained: A Powerful Tool for Sentiment Analysis and Trading
  • Wyckoff Causes & Effects Indicator: How It Works and How to Trade with It
  • Speed Indicator Explained: A Powerful Tool for Market Timing and Trading
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Overbought -
Oversold

Overbought vs. Oversold: How to Navigate Market Extremes Effectively

Once selected a Financial Instrument on the forecaster terminal you will be able to choose between five sections to analyze.

Our section of interest today is the Overbought – Oversold section. Here you will find three indicators to understand if the instrument in question is overbought or oversold, these are: the Forecaster Advanced DPO the Wycoff Causes/Effects and the Speed indicator

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Forecaster Advanced DPO: How This Proprietary Indicator Helps You Spot Market Trends

The Forecaster Advanced DPO is a proprietary indicator that allows you to tell, at a glance, whether a financial instrument is over or undervalued, compared to its historical series (This can be seen on time frames of 1 Month, 6 Months, 1 Year, 3 Years, 5 Years and 10 Years). The indicator is a combination of the DPO indicator (Detrended Price Oscillator) and an algorithm that normalises the DPO figure, based on where prices are at the moment, compared to the range of the previous ten years. Once the indicator is calculated, two 200-period Bollinger bands are applied, one with standard deviation 1, the other with standard deviation 2. These Bollinger bands allow us to create four different zones, which will correspond to the various market phases.

How To View The Chart

Depending on which range the prices are in, we will have different types of signals:

  • GREEN: Strong Buy
  • BLUE: Hold
  • ORANGE: Sell
  • RED: Strong Sell

Investing using this tool: Although this indicator provides timely information, in particular regarding possible purchase points, it is always better to use it in synergy with seasonality. If a financial instrument is in the Strong Buy or Buy zone and the seasonality signals a favorable period for the purchase, the chances that the trading/investment operation will be profitable rise significantly.

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Market Mood Meter Explained: A Powerful Tool for Sentiment Analysis and Trading

The Market Mood Indicator, inspired by CNN Business’s Fear and Greed Index, measures market sentiment for any financial instrument by averaging three statistical indicators—Advanced DPO, Wyckoff Causes/Effects, and Speed—from the Overbought/Oversold section of the Forecaster Terminal.
 
Ranging from -100 (Extreme Fear/Panic Selling), signaling high pessimism and potential market bottoms, to +100 (Extreme Greed/FOMO), indicating high optimism and potential market tops, it serves as both a sentiment and timing tool. Traders should watch for divergences between price and the oscillator in overbought/oversold zones, with trend reversals often confirmed when the indicator hits the zero line; the ideal entry point follows a new divergence after this.
 
For best results, analyze its historical behavior on specific instruments and complement it with other Forecaster Terminal tools like Seasonality, Fundamental Analysis, and COT Reports.

Wyckoff Causes & Effects Indicator: How It Works and How to Trade with It

Wyckoff Causes/Effects

This indicator helps the trader and investor to interpret the chart of any financial instrument, according to Wyckoff’s theory. The Wyckoff Trading Theory is a methodology developed by Richard D. Wyckoff, a financial analyst from the early 20th century.

The theory is based on analyzing price movements and transaction volume to predict future price directions. If the indicator’s prices follow the trend of the financial instrument, then the trend is solid and set to last. If the indicator prices take a different direction (divergence) from the financial instrument under consideration, then the trend is most likely about to reverse.

The indicator combines the momentum and volumes (supply and demand) of the financial instrument.

Speed Indicator Explained: A Powerful Tool for Market Timing and Trading

Speed

The Speed Indicator calculates the speed of a Hull moving average, calculated on the prices of the selected financial instrument.

Velocity = (Current Value – Previous Value) / Number of Periods

If the indicator’s prices follow the trend of the financial instrument, then the trend is solid and set to last. If the indicator prices take a different direction (divergence) from the financial instrument under consideration, then the trend is most likely about to reverse.

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