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newdigital, 2014.03.31 12:17
Williams Percent R Technical Indicator
Williams %R Technical Indicator Developed by Larry Williams
Williams %R indicator is pronounced as Williams percent R indicator. Williams %R Technical Indicator is a momentum oscillator used to analyze overbought and oversold levels in the Forex markets.
The Williams % Range oscillator is similar to the Stochastic Oscillator indicator, apart from that fact that the %R is plotted upside down on a negative scale that is from 0 to -100 and the indicator does not apply a smoothing factor.
The Williams %R indicator analyses the association of the closing prices relative to the High and Low range over a selected number of n candlesticks.
- The closer the closing price of a candlestick is to the highest high of the range selected the closer to zero the %R reading will be.
- The closer the closing price of a candlestick is to the lowest low of the range selected the closer to -100 the %R reading will be.
When doing technical analysis a trader should ignore the minus sign placed before the value, for example -40, the - sign should be ignored, just remember the indictor values are placed in an upside down manner.
- At zero: If the closing price of the candlestick is equal to the highest high of the range the William %R reading will be 0.
- At -100: if the closing price of the candlestick is equal to the lowest low of the range the William %R reading will be -100.
Technical Analysis of Williams Percent R Technical Indicator
Overbought/Oversold Levels
- Overbought- Williams %R values from 0 to -20 are considered overbought while
- Oversold- Williams %R values from -80 to -100 are considered oversold.
As for trading overbought/oversold levels it is best to wait for a currency pair to change direction before taking a signal in the opposite direction. For Example if a currency pair is oversold it is best to wait for the trend to reverse and start to head in an upward direction before buying the currency pair.
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