If we are to name a technical indicator that traders prefer and widely, we can mention the Williams percent range. We can also call or write William percent range as “Williams % R.” Some would even argue that it is the ultimate oscillator.
The Williams percent range and stochastic oscillators
William percent range indicates a momentum that tells us where we can find the last closing price in line with the highest and lowest prices in that given period. However, even though we mentioned that many traders prefer it, we can still say that the stochastic oscillator is still more popular. Now, why did we mention the stochastic oscillator? The two have quite a few similarities, and we can start with the fact that they bought can tell us whether a currency pair is possibly overbought or oversold. The only difference is the fact that the Williams percent range is more sensitive and less popular if we compare them.
The Williams percent range and the relative strength index
The William percent range also has some similarities with another technical indicator. Like the relative strength index or RSI, it is also a momentum indicator, and it somehow measures the current trend’s strength by being scaled. The only difference is that RSI has a midpoint figure or a centerline that is 50 when determining how strong the current trend is, and the William percent range uses the extreme levels -20 and -80 for cues.
Using the Williams percent range in trading
We cannot argue that the Williams percent range is too similar to the stochastic oscillator even when applied in trading. Furthermore, they have the same formula when we look for the currency pair’s relative location! Of course, there is still a difference between the two. Stochastics show the relative location with the help of the time range’s lowest price, while the Williams percent range uses the highest price to know the relative position of the closing price.
Here is more: if we invert the Williams percent range line, it looks exactly the same as the stochastic line. Now, we can clearly see why the stochastic use the 1 to 100 scale and the Williams percent range use the 1 to -100 scale.
If the reading shows that the value is above -20, then it is overbought. On the other hand, if it shows that the value is below -80, it is oversold. Note that even when the indicator says it is overbought or oversold, the price will not always reverse. When we say overbought, we only mean that the price is close to the recent range’s highs, and oversold means the price is close to the current range’s lows.
Using the Williams percent range in determining trend strength
Previously, we have mentioned that the William percent range is a more sensitive version of the stochastic oscillator. Its sensitivity helps us know whether the prices maintain their bullish or bearish momentum or not.
Closing the topic
It is no wonder why some became superfans of this technical indicator. It took one or a few good points from different technical indicators and combined them into one.