An overbought signal occurs when the price of a cryptocurrency rises significantly and quickly, often leading to concerns that it has become too expensive relative to its actual value. This situation usually suggests that the asset may be due for a price correction or pullback.Traders often use various indicators to identify overbought conditions. One popular tool is the Relative Strength Index (RSI), which measures the speed and change of price movements. An RSI reading above 70 typically indicates that an asset is overbought, while a reading below 30 suggests it may be oversold.Investors should exercise caution when acting on an overbought signal. While it may point to a potential price decline, the market can remain overbought for extended periods, leading to further price increases before any correction occurs. Consequently, understanding market sentiment, trends, and other factors is crucial for informed decision-making.