The Williams Percent Range belongs to the oscillator family of technical indicators, which seesaws in value between 0 and over the course of time. Visually, the Williams indicator is a single fluctuating curve with banded lines drawn across at the and value extremities.
Traders view the Williams as a leading indicator and harbinger of price changes on the horizon. Mathematically, the Williams Percent Range indicator is expressed as follows: The Williams indicator may be useful to Forex traders in identifying overbought and oversold areas, potential turning points and potential trend weaknesses. There are specific tip-offs in each case to alert you to these events.
For example, when the indicator goes to , the currency pair in question may be overbought; if below , it may be oversold. Taking the above overbought or oversold boundaries, if the Williams indicator crosses the overbought boundary from above, it could signal a sell opportunity. Crossing the oversold boundary from below, Williams points to a buy opp. Williams spots uptrend weakness if the price goes up but the indicator doesn't. To determine the entry point of the trade, watch the Williams curve to see where it crosses the lower boundary, or the value.
Look for additional confirmation from other technical indicators before getting in. The Smoothed Moving Average is a curve that would generate a signal for entry if it flattens before changing direction.
Execute a buy order at that point, but no more than 2 percent of your account. Exit at the point where Williams rises above the upper extreme of Data provider Incredible Charts suggests extending the default time frame for Williams Percent Range when it comes to trending markets. Usually the default is 14 days, but a longer interval may be needed to smooth volatility and avoid false signals.
It advises going long, or buying, when the Williams indicator falls below the oversold level and rises above When the indicator rises above the overbought level then drops below , you should sell, or go short. Incredible Charts recommends waiting for this reference point as clear evidence of a reversal before jumping in. Timothea Xi has been writing business and finance articles since She has worked as an alternative investment adviser in Miami, specializing in managed futures.
Xi has also worked as a stockbroker in New York City. Forex traders like Williams indicators' ability to foretell reversals. How it Works The Williams indicator may be useful to Forex traders in identifying overbought and oversold areas, potential turning points and potential trend weaknesses.
Trending Markets Data provider Incredible Charts suggests extending the default time frame for Williams Percent Range when it comes to trending markets.
Williams Percent Range Forex Traders: About the Author Timothea Xi has been writing business and finance articles since Trading Strategies for Crude Futures.
More Articles You'll Love. How to Use Forex Bounce Strategy. How to Trade Pivot Points in Forex. Intraday Put Call Ratio. Butterfly in Fixed Income Trading Strategies.More...