The ratio of the current price of a stock to its moving average price over a period of time is used to determine if the stock is overbought or oversold. A ratio over 1 means the stock is trading above its trend and could be overbought, while a ratio under 1 means it is trading below its trend and may be oversold. Traders watch the ratio to trend to help identify potential buy or sell opportunities based on the stock moving back in line with its trend.