A market situation/ condition in which the price of a security (or broadly an investment) has increased above a sustainable point- that is, a level that the price will not increase further above. From a technical analysis perspective, an overbought security (e.g., a stock) will be expected to enter a correction cycle. In other words, the price will be projected to take a U-turn and start to move down as new sellers enter the market at that price level and purchases are no more willing to buy at a yet higher price.

A security is overbought when its price hits a point at which more sellers start to turn out (a level known as resistance or resistance price): resistance price is a price at which a security is expected to attract more sellers than buyers.