Note

How to Use Williams %R (Williams Percent Range)

Verified Official
· Views 625

The Williams Percent Range, also called Williams %R, is a momentum indicator that shows you where the last closing price is relative to the highest and lowest prices of a given time period.

As an oscillator, Williams %R tells you when a currency pair might be “overbought” or “oversold.”

Think of it as a less popular and more sensitive version of Stochastic.

How to Use Williams %R (Williams Percent Range)

As a momentum indicator, it also gives RSI-like vibes in that it measures the strength of a current trend.

But while RSI uses its mid-point figure (50) to determine trend strength, traders use %R’s extreme levels (-20 and -80) for cues.

How to Trade Forex Using the Williams %R Indicator

Did you know that Stochastic and %R use the same formula to pinpoint the relative location of a currency pair?

The only difference is that Stochastic shows you a relative location by using the lowest price in a time range while %R uses the highest price to pinpoint the closing price’s position.

In fact, if you invert the %R line, it will have the EXACT SAME LINE as Stochastic’s %K line!This is why Williams %R uses the 0 to -100 scale while Stochastic is scaled from 0 to 100.

A reading above -20 is OVERBOUGHT.

A reading below -80 is OVERSOLD.

An overbought or oversold reading does NOT guarantee that the price will reverse.

All “overbought” means the price is near the highs of its recent range.

The same goes for oversold. All “oversold” means the price is near the lows of its recent range.

Determining Trend Strength Using %R

Williams %R’s sensitivity to volatile prices comes in handy when you want to know if prices are maintaining their bullish or bearish momentum.

In EUR/USD’s daily chart below, you can see that the pair tried to extend its uptrend but failed to reach a new price and %R highs.

This means that prices aren’t hitting the high end of their range as quickly as they did before and that the bullish momentum might be running out of steam.In this case, the pair ended up dropping 200 pips in a week!

How to Use Williams %R (Williams Percent Range)

Almost immediately after that, the price gained enough bullish momentum to push %R above its oversold levels.

But although EUR/USD is still poppin’ up red candlesticks, they’re not enough to drag Williams %R back to its previous lows.

Another loss of momentum?Williams %R sure thought so!

Turned out, the bulls DID take over and pushed EUR/USD around 775 pips higher in less than 30 days.

Now that’s good oscillating right there. No wonder superfans call Williams %R as “The Ultimate Oscillator!”

Reprinted from Babypips,the copyright all reserved by the original author.

Edited 28 May 2021, 12:50

Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.

FOLLOWME Trading Community Website: https://www.followme.com

If you like, reward to support.
avatar

Hot

Plajw

-THE END-