The Williams Percent Range (Williams %R or W%R) is a technical analysis indicator used to identify overbought and oversold conditions in the stock market. It was developed by Larry Williams and is a momentum oscillator that measures the level of the market's close relative to the high-low range over a certain period of time.
The Williams %R indicator is plotted on a chart with values ranging from 0 to -100. Readings above -20 indicate that the stock is overbought, while readings below -80 suggest that the stock is oversold. The calculation of Williams %R involves the following steps:
1. Determine the highest high and lowest low over the chosen time period (usually 14 days).
2. Calculate the difference between the current closing price and the lowest low.
3. Divide the result from step 2 by the difference between the highest high and lowest low.
4. Multiply the result from step 3 by -100 to get the Williams %R value.
Williams %R is a useful indicator to identify potential buy and sell signals. A buy signal is generated when the indicator crosses above the -80 level from oversold territory, while a sell signal is generated when the indicator crosses below the -20 level from overbought territory. However, it is important to note that the Williams %R should not be used in isolation, but rather in conjunction with other technical indicators and analysis tools to make well-informed trading decisions.
How to calculate William percentage range?
Determine the highest high and lowest low over the chosen time period (usually 14 days).
Calculate the difference between th
1. Determine the highest high and lowest low over the chosen time period (usually 14 days).
Let's say the highest high over the past 14 days is $50 and the lowest low is $40.
2. Calculate the difference between the current closing price and the lowest low.
Let's say the current closing price is $45. The difference between $45 and $40 is $5.
3. Divide the result from step 2 by the difference between the highest high and lowest low.
The difference between $50 and $40 is $10. So, $5 divided by $10 is 0.5.
4. Multiply the result from step 3 by -100 to get the Williams %R value.
0.5 multiplied by -100 is -50. So, the Williams %R value for this example is -50.
This means that the current closing price is closer to the lowest low than the highest high over the past 14 days, and the stock is considered oversold.
Post a Comment