William's Percent R Analysis and William's Percent R Signals
Williams Percent R Indicator Developed by Larry William
Williams Percent R indicator is pronounced as Williams percent R trading indicator. William's % R Indicator is a momentum oscillator trading used to analyze overbought & over-sold levels in the markets.
The William's Percentage Range oscillator trading is similar to the Stochastic, apart from that fact that the Percent R is plotted upside down on a negative scale that is from 0 to -100 & the technical indicator doesn't apply a smoothing factor.
Williams Percent R, Percentage R Trading Indicator - Indicators
The Williams Percent R trading indicator analyzes the association of the closing prices relative to the High & Low range over a chosen number of n candles.
- The closer the closing price of a candle is to the highest high of the range selected the closer to zero the Percent R reading will be.
- The closer the closing price of a candle is to the lowest low of the range chosen the closer to -100 the Percent R reading will be.
When doing technical analysis a forex trader should ignore the minus sign placed before the value, for example -40, the - sign should be ignored, just remember indicator values are placed in an upside down manner.
- At zero: If the closing price of the candle is equivalent 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 Williams % R reading will be -100.
Analysis of William's Percent R Indicator
Over-bought/Oversold Levels on Technical Indicator
- Overbought- William's % R values from 0 to -20 are considered over-bought while
- Oversold- Williams % 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 the opposite market direction. For Example if a forex pair is oversold it's best to wait for the trend to reverse & begin to head in an upward direction before buying the forex pair.
Trend Reversal Signals
The Williams % R trading indicator used to predict a market trend reversal signal when trading a currency pair. The William Percent R indicator always predict a reversal using the following method
Bearish Reversal Signal- Williams Percent R trading indicator forms a peak & turns down a couple of days before the market trend peaks & turns down. The example below shows Percent 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 trading indicator forms a trough and turns up a couple of days before the market trend bottoms & turns up.
Bullish Reversal Signal after Downtrend
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