Williams%R is a momentum indicator used to indicate overbought and oversold levels, with readings from 0 to -20 considered overbought and -80 to -100 considered oversold. It is calculated using the highest high, current close, and lowest low over a given time period. Traders use Williams%R signals to identify potential entry points by looking for the indicator to move back into oversold or overbought levels depending on the prevailing market trend.
Williams%R is a momentum indicator used to indicate overbought and oversold levels, with readings from 0 to -20 considered overbought and -80 to -100 considered oversold. It is calculated using the highest high, current close, and lowest low over a given time period. Traders use Williams%R signals to identify potential entry points by looking for the indicator to move back into oversold or overbought levels depending on the prevailing market trend.
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Williams%R is a momentum indicator used to indicate overbought and oversold levels, with readings from 0 to -20 considered overbought and -80 to -100 considered oversold. It is calculated using the highest high, current close, and lowest low over a given time period. Traders use Williams%R signals to identify potential entry points by looking for the indicator to move back into oversold or overbought levels depending on the prevailing market trend.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as TXT, PDF, TXT or read online from Scribd
Developed by Larry Williams, Williams%R is a momentum indicator used to indicate
overbought and oversold levels.
Overbought market conditions are found at the upper band (readings from 0 to -20 ) and oversold conditions at the lower band (readings from -80 to -100). Interpretation The interpretation is similar to the Stochastic Oscillator, except that Williams %R ranging scale is plotted using negative values from 0 to -100. 0 to -20 readings are considered overbought; -80 to -100 readings are considered oversold. Formula %R= -100x[(Highest High - Current Close)/( Highest High - Lowest Low)] Popular trading signals from Williams%R I. In trending markets Take only signals from Williams%R in the main direction of the trend. If the mai n trend is up, take only oversold signals from Williams%R. Conversely, if the ma in trend is down, take only overbought signals from Williams%R. Some currency traders identify the currency pair's long-term trend and then use extreme readings for entry points. If the mid long-term trend is bearish for a c urrency pair, then overbought readings could mark potential entry points to go S HORT (again). II. In ranging markets Go long when Williams %R falls below the oversold level and rises back above Go short when Williams %R rises above the overbought level and falls back below. It is recommended to use Williams%R in conjunction with other technical analysis tools to make a complete forex trading system.