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Williams Percent R Forex Technical Analysis and Williams Percent R Forex Trading Signals

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.

Williams %R, Percent R Technical Indicator

Williams %R, Percent R Technical Indicator - Forex Trading Indicators

 

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.

 

 

Trend Reversal Signals

The William %R indicator used to predict a trend reversal signal when trading a currency pair. The Williams %R indicator always predict a reversal using the following method

 

Bearish Reversal Signal- Williams Percent Range indicator forms a peak and turns down a few days before the price trend peaks and turns down. The example below shows %R giving a reversal signal before price starts to head down and change to a down trend.

Bearish Reversal Signal- Williams Percent Range Indicator

Bearish Reversal Signal after Forex Uptrend

 

Bullish Reversal Signal- Williams Percent Range indicator forms a trough and turns up a few days before the price trend bottoms and turns up.

Bullish Reversal Signal- Williams Percent Range Indicator

Bullish Reversal Signal after Forex Downtrend

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