William’s Percent Range | SigmaForex

William’s Percent Range

It was developed by Larry Williams. This system attempts to measure overbought and oversold market conditions.
The %R always falls between a value of 100 and 0. There are two horizontal lines in the study which represent the 20% and 80% overbought and oversold levels.
Indicator values ranging between 80 and 100% indicate that the market is oversold.

Indicator values ranging between 0 and 20% indicate that the market is overbought.
But we have to take in consideration that overbought does not necessarily imply time to sell and oversold does not necessarily imply time to buy so, it’s very important that if an overbought/oversold indicator, such as Stochastic or Williams %R, shows an overbought level, the best action is to wait for the futures contract’s price to turn down before selling.
So, you sell when %R reaches 20% or lower (the market is overbought) and buy when it reaches 80% or higher (the market is oversold). However, as with all overbought/oversold indicators, it is wise to wait for the indicator price to change direction before initiating any trade.

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