Williams Percent Range - What is %R

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 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).

How to set up indicator in trading platform

Use indicators after downloading one of the trading platforms, offered by IFC Markets.