OB/OS Signals
OB/OS Signals are areas where price is statistically stretched relative to its recent history, often near reversal zones, trend continuation pivots, or breakout expansions.
OB/OS Signals
Our OB/OS signals detect when an asset’s move is unusually strong (OB) or unusually weak (OS) versus its historical baseline. These are context signals; use these alerts as context/confirmation, not standalone trade instructions.
Overbought (OB) → price strength is elevated relative to history; can precede pullbacks, mark exhaustion, or confirm breakout strength.
Oversold (OS) → price weakness is elevated relative to history; can precede bounces, mark exhaustion, or confirm breakdown strength.
Important: OB/OS does not automatically mean reversal. It flags a statistical extreme, which can either mean-revert or extend in strong trends. Direction depends on acceptance vs. rejection around the level.
Market & Timeframes
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What is “Overbought” / “Oversold” here?
OB/OS occurs when the current move is statistically stronger/weaker than typical, compared to recent historical price behavior.
This can mark exhaustion (potential reversal) or signify momentum expansion (trend move or solid breakout).
Use the signals to confirm Reversal, Trends, or to find Take-profit zones.
Practical uses
1) Breakouts (momentum expansion)
Idea: Strong breakouts often shows OB (up) or OS (down) as momentum expands.
Signal: OB on topside breaks; OS on downside breaks.
How to use: If aligned with your bias/HTF structure, treat as breakout confirmation. If not, watch for failure (possible fakeout).
2) Trend continuation (buy dips / sell rallies)
Idea: In trends, OB/OS often reset around pullbacks/rallies.
Signal: In uptrends, OS on pullbacks near demand; in downtrends, OB on rallies near supply.
How to use: Combine with HH/HL or LH/LL structure to time continuation entries.
3) Reversals / Mean reversion
Idea: Extended trends can end with OB/OS extremes that fail to follow-through.
Signal: OB at/into major resistance that rejects; OS at/into major support that rejects.
How to use: Look for failure and reclaim (wick rejections, BOS/CHOCH on lower TF) before fading.
4) Take-profit timing
Idea: Extremes are natural spots to take profit.
Signal: OB after a strong leg up; OS after a strong leg down.
How to use: Scale out into OB/OS when it aligns with HTF targets or opposite range edges.
Best practices
Confluence first: market structure, HTF levels, volume/impulse, and session context.
Acceptance vs. rejection: expansion beyond = continuation; snap-back/reclaim = mean reversion.
Risk controls: place stops beyond the invalidating level; predefine partials (prior swing, range mid, opposing band).
Timeframe alignment: use HTF for bias, LTF for timing.
Avoid absolutes: OB/OS can persist in strong trends—don’t countertrend blindly.
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These signals are included when you subscribe to our Trading Signals. Get Instant Access Here
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