Overbought describes a stock or market that has been bought heavily over its last few price bars, each bar being one time period on the chart. Timothy Sykes, in a guide dated Nov. 29, 2024, puts the line at an RSI, or Relative Strength Index, above 70. Such a reading does not guarantee a price drop. Macroption, retrieved Oct. 19, 2026, puts the line above 80.
Key facts, per the outlets cited
- Scale: RSI runs from 0 to 100, typically over a 14-day period.
- Overbought line: Above 70 in one guide, above 80 in the other.
- Common borders: 20 and 80 are the most popular. Some traders use 30 and 70, or 10 and 90.
- Breadth version: A market breadth measure: a 10-period exponential moving average of the difference between advancing and declining issues.
What the RSI number measures
Timothy Sykes calls RSI a momentum oscillator, a measure of the speed and change of price movements. It typically covers a 14-day period and runs from 0 to 100. J. Welles Wilder developed the index in 1978. Macroption adds a reading rule: most of the recent bars made higher closes than the previous bar when RSI is high.
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements, typically over a 14-day period.
Why the overbought line differs
Timothy Sykes places the overbought line above 70, and treats an RSI above 80 as extreme. It says such readings often lead to stronger corrective actions.
Macroption draws the line above 80. Its most popular borders are 20 and 80, and some traders use 30 and 70, or 10 and 90. The farther a border sits from the middle, the less often RSI reaches it, so fewer signals appear.
Overbought lines by source
Which overbought line does each source use?
| Source | Overbought line (RSI) | Other notes | Source |
|---|---|---|---|
| Timothy Sykes | above 70 | above 80 called extreme | Source: Overbought and Oversold Stocks in RSI Terms Explained (timothysykes.com), accessed Oct 19, 2026 |
| Macroption | above 80 | 20 and 80 are the most popular borders | Source: RSI Overbought and Oversold Condition (macroption.com), accessed Oct 19, 2026 |
| Macroption, other borders | 70 with 30, or 90 with 10 | Used by some traders | Source: RSI Overbought and Oversold Condition (macroption.com), accessed Oct 19, 2026 |
Each row shows one source's rule; the table does not show how often these lines are reached or whether they predict price moves.
What a high reading can and cannot show
Timothy Sykes says a high reading means buying pressure has pushed the price to an unsustainable level, which raises the likelihood of a pullback or sideways movement. A high reading is not always an immediate sell signal, though it calls for caution.
The same guide says a stock in overbought territory may keep rising while momentum stays strong. It could also fall sharply if traders start taking profits or negative news triggers a sell-off.
Macroption also suggests an overbought market can be read as being in an uptrend. It adds that RSI can also be used as a trend-following indicator.
The breadth indicator with the same name
MarketInOut describes its Overbought/Oversold (OB/OS) indicator as a market breadth measure. The indicator is built on the smoothed difference between advancing and declining issues, calculated as a 10-period exponential moving average. It shows when the stock market is overbought, with a correction due in that case. Extreme readings may not be followed by the expected correction.
Analysis: two tools with one name
The breadth gauge is built from advancing and declining issues. Readers who apply RSI cut-offs such as 70 or 80 to the breadth gauge are mixing two different tools.
Analysis: the line matters as much as the number
Sources give different lines for the same word, so readers may get different answers. Macroption says that the further a border sits from the middle, the less often the market reaches it and the fewer trading signals RSI gives. The sources do not show that either line predicts a price move, so the label is best read as a description of recent buying, not a forecast.
What is confirmed and what is not
Timothy Sykes and Macroption both tie overbought to a high RSI reading after strong recent buying. Only one page attributes RSI's development to J. Welles Wilder in 1978, and the cited pages do not quote Wilder's own text. The pages do not say whether 70 or 80 works better, how often a correction follows, or how long an overbought reading lasts. MarketInOut's breadth description rests on one page, and none of the three pages tests these rules on crypto markets.
Next step
Macroption says the simplest RSI trading systems are less likely to give consistently profitable results. A separate explainer covers crypto futures trading risks: leverage, margin and scams.
Sources: Overbought and Oversold Stocks in RSI Terms Explained (timothysykes.com), accessed Oct 19, 2026 · RSI Overbought and Oversold Condition (macroption.com), accessed Oct 19, 2026 · Overbought/Oversold (marketinout.com), accessed Oct 19, 2026
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