Ask Colin

In your recent article you referred to an up trend being "over-stretched". Does this mean it is "overbought"?

"Overbought" has a very specific meaning with respect to momentum oscillators, as well as a more general meaning. This means that using it can be ambiguous, because I might use it with a general meaning, but a reader may interpret it to mean that a momentum oscillator has gone into the overbought range. However, it seeking to avoid that ambiguity, I have used a term that has also been ambiguous for you. All I mean is that sometimes a trend will develop in an orderly manner. It will have a regular slope, if you like. At other times a trend will accelerate so that it has the appearance of being stretched out. You make this observation visually from the chart. This will often mean that a momentum oscillator will also have swung into the overbought range. However, if it is a clear case, we should not need an oscillator to see it - it will jump off the price chart at us.

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