Overbought
Volume Price Analysis glossary · Wyckoff'S Laws & The Four Market Phases
Definition
In VPA, a market where insiders have distributed most inventory and remaining buyers are predominantly retail; identified by absorption anomalies and volume divergence, not oscillator readings.
Overbought in plain English
In everyday trading talk, "overbought" means a price has risen so much it's due to fall — but VPA defines it more carefully and by cause, not by a formula. Here it means the big insiders have already quietly SOLD off most of the shares they were holding ("distributed their inventory"), so the only buyers left are ordinary retail folks with small money and no staying power. You spot it not from a mechanical indicator but from clues: rising prices on shrinking volume (a "divergence"), and signs that big sellers are dumping into every rally. It's like a hot concert ticket the scalpers have all cashed out of — the crowd still wants in, but the smart money has already left, so a drop is likely.
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