Williams Percent Range

What is the % R?

Named after its developer, Larry Williams, the Williams Percentage Range (% R) is a technical indicator that identifies which the assets are overbought and which are oversold. In turn, the distinction helps to identify possible market tipping points. 

While it is seen as a single line oscillating on the reverse scale, the % R is entirely different from the Stochastic Oscillator. 

How the % R is Applied

The Williams Percentage Range determines possible picture on the chart that demonstrates overbought and oversold conditions. While this is the case, when looking into a trend, the indicator should be considered:

The asset can be overbought should it be located above -20. It may be resold if it goes below -80.

Detached from extreme zones, probable turning points may be suggested by indicators:

Crossing the overbought border above, a sell probability is signalled by the Williams Percentage Range  

Crossing the oversold border below, a buy probability is signalled.

While Pattern deviation occurs infrequently, it indicates a possible trend weakness:

* A weak uptrend is determined through the rise in price to a new maximum value while the indicator does not;

* Conversely, a weak downtrend is indicated by a fall in price to the new maximum value while the indicator does not.

Strategy for the Williams Percent Range 

The trading strategy is simple:

* One is encouraged to make a buy when the market is oversold (% R reaches -80% or lower);

* Selling is encouraged when the market is overbought (% R reaches -20% or higher).

Calculation 

Divide the difference between the high price and the closing price within a specific time duration by the difference between high and low prices for the same period. 

The time span is 14. 

R% = – ((H-C) / (H-L)) x 100;

In the formula:

C – last closing price;

L – the lowest price for a certain period;

H – the highest price for a certain period.