Williams Percent Range - What is %R
Williams Percent Range (%R) is a technical indicator developed by Larry Williams to identify whether an asset is overbought or oversold and therefore to determine possible turning points. Unlike the Stochastic oscillator Williams Percent Range is a single line fluctuating on a reverse scale.
For more information how to set the indicator in the terminal please click here
How to Use %R
The main goal of Williams Percent Range is to identify possible overbought and oversold areas, however the indicator should be considered within trend analysis:
- Generally if the indicator climbs above -20, the asset may be overbought;
- If the indicator drops below -80, the asset may be oversold.
Leaving extreme areas the indicator may suggest possible turning points:
- Crossing the overbought boundary from above, Williams Percent Range signals a possible sell opportunity;
- Crossing the oversold boundary from below, Williams Percent Range signals a possible buy opportunity.
Divergence patterns are rare, but may indicate possible trend weakness:
- If the price climbs to a new high, but the indicator does not, that may be a sign of the uptrend weakness;
- If the price falls to a new low, but the indicator does not, that may be a sign of the downtrend weakness.
Williams Percent Range Indicator
Williams Percent Range strategy
Williams %r indicator, as already mentioned, helps to determine the points when the market is oversold or overbought. The trading rules of Percent Range strategy are simple:
- Buying when the market is oversold (%R reaches -80% or lower);
- Selling when the market is overbought (%R reaches -20% or higher).
Williams %R Formula (Calculation)
To calculate the WPR indicator, the difference of the high price and the closing price over a period is divided into the difference of the high and low prices over a period. The default period is equal to 14 (the last 14 bars from the considered price chart).
R% = - ((H - C)/(H – L)) x 100; where: C – latest close price; L – the lowest price over a given period; H – the highest price over a given period.
How to set up indicator Williams Percent Range in trading platform
Use indicators after downloading one of the trading platforms, offered by IFC Markets.