Knowledge of current economic events is a fundamental element of effective trading. In the case of currency pairs and indices, the ability to use the calendar is already satisfactory. Nevertheless, to assess market sentiment, it is worth following current events. In the case of instruments such as shares, tracking information from companies is a necessity.
Williams %R Indicator
Type of Indicator
Williams %R, also known as Williams Percent Range, is a momentum technical analysis oscillator that measures the level of the closing price relative to the high-low range over a specified period. It helps traders identify overbought and oversold market conditions.
Purpose
The primary purposes of the Williams %R indicator are:
Identifying overbought (overvalued) and oversold (undervalued) conditions,
Helping determine potential price reversal points,
Assessing the strength and momentum of price movements.
Calculation Method
Williams %R is calculated based on the highest high, lowest low, and the closing price over a selected period (typically 14 days). The formula is as follows:
where:
Highest High is the highest price over the period,
Lowest Low is the lowest price over the period,
Close is the closing price.
The result is a value between -100 and 0, where:
Values from -20 to 0 indicate overbought conditions,
Values from -80 to -100 indicate oversold conditions.
Trading Based on the Williams %R Indicator
Overbought and Oversold Conditions:
If Williams %R is above -20, it indicates overbought conditions. This suggests that the price may be too high and a correction might occur. It is a potential signal to sell.
If Williams…
