%R Larry Williams

(Williams %R)

Usage: Identifying Overbought/Oversold Market Levels

◙ Trading: Detecting Trend Continuation / Momentum Failures

Standard Settings: 14 Periods

 

Introduction to Williams %R

Developed by Larry Williams, Williams %R is a momentum oscillator widely used for its ability to identify overbought and oversold market levels and to detect momentum failures.

-Williams %R oscillates from values 0 to -100

-Williams %R shows the level of the close relative to the highest high for a particular period:

  • When Williams %R is near zero (0), it shows the price is trading near the highest high (look back period)
  • When Williams %R is near -100, it shows the price is trading near the lowest low (look back period)

-Similarly, the Stochastic Oscillator shows the level of the close relative to the lowest low (► more about Stochastic)

-Williams %R and the Fast Stochastic Oscillator produce the exact same reading, only the scaling is different

 

 Calculating Williams % R

■ Williams % R = HC / HL * - 100

Where,

HC = Highest High (in R Periods) – Last Closing Price
HL = Highest High (in R Periods) – Lowest Low (in R Periods)

 

Trading with Williams %R

The Williams %R is a momentum indicator comparing closing prices to the highest high.

  • Identifying overbought/oversold market levels
  • Measuring and evaluating trend momentum
  • Detecting momentum continuation or failure

Williams %R and the Fast Stochastic Oscillator produce the exact same reading, only the scaling is different.

Overbought/Oversold Market Levels

□ Williams % R indications from 0 to -20 are alerting overbought market levels in ranging markets. In trading markets, these levels may indicate a short correction before the trend continuous

□ Williams % R indications from -80 to -100 are alerting oversold market levels in ranging markets. In trading markets, these levels may indicate a short correction before the trend continuous

□ The Williams %R centerline (-50) is an important level

Momentum Failures

Momentum failures occur when the price of an overbought/oversold asset fails to come back into the previous overbought/oversold territory. This situation may signify a strong price movement in the opposite direction (trend reversal).

 

Platform Setup

You can install the 'Williams %R' directly in MetaTrader-4 or MetaTrader-5:

□ GO TO → INDICATORS → OSCILLATORS → WILLIAMS' PERCENT RANGE

□ STANDARD SETTINGS → 14

 

%R Larry Williams

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