Williams' Percentage Range - overbought oversold stocks.

Williams' Percentage Range (W%R)

Williams' %R is an effective momentum indicator that measures overbought oversold levels. Like other indicators W%R ranges between 0% and 100% but in opposite to the other indicators the 0% indicating overbought and 100% the oversold stocks. W%R measures the closing price in relation to resent low/high range. A bullish signal is generated when the W%R has reached 100, five time bars have elapsed and the W%R has subsequently fallen to 95. A reverse signal is considered as bearish. For the sake of simplicity, the W%R closed above 10% is considered bullish and below 90% bearish. In trending markets, the W%R stays at one end of the scale and giving false signals to trade against the trend. That is why W%R is not considered a stand-along technique, and it is essential to use it with some sort of trend formation indicators. The divergence between price and W%R rarely occurs and present an important buy/sell signal. As our research shows the W%R move to upper or lower bound can be used as an earliest signal among other technical indicators to indicate an impending reversal. Using the Williams %R bullish divergence/bearish divergence, chart patterns, trendlines, support, and resistance lines along with the W%R chart can be very useful.