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Williams` Percent Range - %R

Williams’ Percent Range (%R) is an indicator of technical analysis that defines oversold/overbought condition. Williams’ Percent Range is built like Stochastic Oscillator. The difference is that the first one has a reversed scale and the other is formed with the help of internal smoothing.

The oversold condition is marked when the indicator’s figures are within the range from -80% to -100%. Figures from -0% to -20% mean that the market is overbought. When analyzing, minus can be omitted because it is assigned to the indicator due to the reversed scale formation.

There are some rules proper to all overbought/oversold indicators. Specifically, one should follow their signals after the price reversals in a corresponding direction. When the market is overbought, before selling securities it is better to wait until the prices reverse downwards.

Williams’ Percent Range is capable of predicting price reversals over certain periods of time.

Calculation

Below is the calculation of the %R indicator, which is very similar to the Stochastic Oscillator formula: %R = (HIGH(i-n)-CLOSE)/(HIGH(i-n)-LOW(i-n))*100

where
CLOSE - is today`s closing price;
HIGH(i-n) - is the highest high over a number (n) of previous periods;
LOW(i-n) - is the lowest low over a number (n) of previous periods.

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