Williams %R
Type
Momentum oscillator
Short introduction
The Williams %R was developed by Larry Williams to indicate overbought and oversold situations. The Williams %R is strongly based on the "Stochastic" indicator.
Statement
The Williams %R is intended to represent the force inherent in upward or downward prices. The indicator relates the current price to the trading margin, that is, the difference between the highest and lowest price, by means of quotient formation.
Like almost every oscillator, the Williams %R is listed in the range between 0 and 100. A value of 100 indicates that the current price corresponds to the low of the period, a value of 0 indicates that the current price corresponds to the highest price in the observation period. Because in this case the buy signal would be generated in the upper range and the sell signal in the lower range, the display is usually reversed and thus corresponds to the "normal" display of indicators.
Formula/calculation
%R = ((Hn-C)÷(Hn-Ln))×100
where:
C = Current close price
Hn = High of the last period
Hn = Low of the last period
Interpretation
The extreme zones in Williams %R are usually between 0 and 20 and between 80 and 100. If the indicator leaves the extreme range (oversold) between 100 and 80 from below to above, then this is considered a buy signal. If the indicator eaves the range between 0 and 20 (oversold) from above to below, this is considered a sell signal. Because of its extreme speed, the Williams %R is particularly suitable for defining entry signals. However, Williams recommends restricting the indicator to already existing trends.
Default setting
- Extremely short-term: 5 days
- Medium-term: 14 days
- Long-term: 28 days
Example: Chart with Williams %R
