William's Percent R Analysis and William's Percent R Signals
William's % R Indicator Created by Larry William
William's % R indicator is pronounced as William's percent R indicator. William's % R Indicator is a momentum oscillator used to analyze overbought & oversold levels in the markets.
The William's % Range oscillator is similar to the Stochastic, apart from that fact that the % R is plotted upside down on a negative scale that's from 0 to -100 & the indicator does't apply a smoothing factor.
William's % R, Percent R Indicator - Indicators
The William's % R indicator analyzes the association of the closing prices relative to the High & Low range over a selected number of n candlesticks.
- The closer the closing price of a candle 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 candle 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 candle is equal to the highest high of the range the William % R reading will be 0.
- At -100: if the closing price of the candle is equal to the lowest low of the range the William % R reading will be -100.
Analysis of William's Percent R Indicator
Overbought/Oversold Levels on Indicator
- Overbought- William's % R values from 0 to -20 are considered overbought while
- Oversold- William % R values from -80 to -100 are considered oversold.
As for overbought/oversold levels it's best to wait for a currency pair to change direction before taking a signal in opposite direction. For Example if a currency pair is oversold it's best to wait for the trend to reverse & 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 William % R indicator always predict a reversal using the following method
Bearish Reversal Signal- William's % R indicator forms a peak & turns down a few days before the price trend peaks & turns down. The example below shows % R giving a reversal signal before price starts to head down & change to a down trend.
Bearish Reversal Signal after Uptrend
Bullish Reversal Signal- William's % R indicator forms a trough & turns up a few days before the price trend bottoms & turns up.
Bullish Reversal Signal after Downtrend
