A market situation/ condition in which the price of a security (or broadly an investment) has dropped below a sustainable point- that is, a level that the price will not fall further below. From a technical analysis perspective, an oversold 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 up as new purchasers enter the market at that price level and sellers are no more willing to sell at a yet lower price.

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