Williams' Percent Range (Williams %R, or %R) is a momentum indicator that measures overbought/oversold levels, which fluctuates between 0 and -100%. When the value reaches 0% it means that the closing price is the same as the period high. Conversely, when the value reaches -100% it means that the closing price is identical to the period low.
The Williams %R is mostly used as a hint of the market’s condition on the trending markets. It shows a reversal in the underlying instrument’s price. Frequently this indicator reaches its peak and turns down a bit earlier than the instrument’s price. Similarly, %R reaches its lowest point and turns up a bit earlier than the instrument’s price.
Methods of use:
| 1. | Readings in the 0 to -20% range: the market is overbought; this can be treated as a signal to sell. |
| 2. | Readings in the -80 to -100% range: the market is oversold; this can be treated as a signal to buy. |
Note: It is advisable to wait for the indicator price to change direction before making any trading decisions.
