What is Williams %R in Technical Analysis? - ybarracopievere

Description: Williams %R is a momentum oscillator developed by Larry Hank Williams. The indicator uses an opposite function of the vivace Stochastic Oscillator in its calculation. While readings in the range of -80 to -100 are interpreted as oversold, readings in the range of 0 to -20 are interpreted to be overbought. The underlying purpose of the indicator is to liken the occurrent damage of a security with the highest high assess over a specific period of time. The oscillator is a bounded one and oscillates inside a range of 0 to -100. Notably, the Hank Williams %R and Fast Stochastic Oscillator look back exactly the same when planned on a chart with the scaling being the only differentiating ingredien between the two. The default setting for the Hank Williams %R uses 14 periods in its deliberation.

Sir Bernanrd Williams %R Calculation

Williams %R is calculated in a very similar manner as the Stochastic Oscillator. The formula for the same is every bit follows:

Thomas Lanier Williams %R = (Highest High – Current At hand / Highest High – Lowest Low) x (-100)

Williams %R Interpretations

Overbought and Oversold: A reading preceding -20 on the oscillator is considered as overbought while a reading below -80 connected the Williams %R is considered as oversold. Put differently, a reading above -20 indicates that the security is trading at the top end of the high low range over the last 14 periods. Similarly, a reading down the stairs -80 indicates that the security measur is trading at the bottom end of the high low chain of mountains over the last 14 periods. One can adjust these threshold limits for overbought and oversold as per the characteristics of the fundamental security. However, one should keep in idea that an overbought reading on the oscillator doesn't necessarily mean that the stock is going to reverse. In fact information technology can persist in the overbought district for extended periods of time.

-50 Crossovers: Williams %R oscillates within a range of 0 to -100 with -50 as the centre. A cross above the -50 level is considered as optimistic, piece a cross below the -50 storey is considered As bearish.

Williams %R Divergences: When prices piddle a higher high while the Williams %R refrains from doing then and makes a lour high instead we stimulate a Bearish Divergence in place. Conversely, when prices make a lower low but the oscillator refrains from qualification a lower low, we experience a Bullish Divergence in situ. These divergences are attending in identifying the instances when the stock is losing momentum on either the upper side or the downside and can often indicate trend reversals.

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Source: https://www.abhijitpaul.com/what-is-williams-r-in-technical-analysis/

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