The term "overbought" refers to a situation in which an asset or security has experienced an unusually large increase in price, often driven by excessive optimism and speculation. This can lead to a sharp decline as investors become more cautious and sell off their holdings, resulting in a correction of the overvalued asset. In technical analysis, an indicator such as the Relative Strength Index (RSI) is used to determine when a security has become "overbought," meaning that it has risen too quickly and may be due for a pullback.