oversold

v.
Past tense and past participle of oversell.

adj.
Characterized by prices regarded as excessively low because of prior heavy selling and a concomitant decline in prices: an oversold stock market.

1. A condition in which the price of an underlying asset has fallen sharply, and to a level below which its true value resides. This condition is usually a result of market overreaction or panic selling.

2. A situation in technical analysis where the price of an asset has fallen to such a degree - usually on high volume - that an oscillator has reached a lower bound. This is generally interpreted as a sign that the price of the asset is becoming undervalued and may represent a buying opportunity for investors.

Investopedia Says:
1. Assets that have experienced sharp declines over a brief period of time are often deemed to be oversold. Determining the degree to which an asset is oversold is very subjective and could easily differ between investors.

2. Identifying areas where the price of an underlying asset has been unjustifiably pushed to extremely low levels is the main goal of many technical indicators such as the relative strength index, the stochastic oscillator, the moving average convergence divergence and the money flow index.

Oversold is the opposite of overbought.

Related Links:
Learn how this indicator uses both price and volume to record a more complete picture of price action. The Basics of Money Flow
Use this indicator to validate a change in price direction and moving averages. Volume Oscillator Confirms Price Movements
Spot extreme short-term price drops and profit on the rebound. Tales From The Trenches: A Simple Bollinger Band Strategy
Let's explain the confusion between relative strength and relative strength index, a frequently used technical analysis oscillator. Getting to Know Oscillators - Part 2: RSI

Description of a stock or market that has experienced an unexpectedly sharp price decline and is therefore due, according to some proponents of Technical Analysis, for an imminent price rise. If all those who wanted to sell a stock have done so, there are no sellers left, and so the price will rise. See also Momentum Indicators; Overbought.