How to use Williams Percent Range (Williams %R) in Forex

The Williams Percent Range is an indicator in Forex trading used to determine closing price levels in relation to the lowest and highest prices within a given period.

Also known as Williams %R, this indicator helps traders to identify oversold and overbought conditions in the market.

The Williams %R is much similar to Stochastic Indicator, but the former is more sensitive than the latter.

This momentum indicator shows the relative strength of the prevailing trend in the market.

It uses the same formula as Stochastic Indicator to show currency price, but Williams %R uses highest price rather than the lowest price.

Stochastic uses the scale of 0-100 while Williams %R uses the scale of 0 to -100

Using Williams %R in Forex trading

Williams %R is used to determine when a currency price is overbought and when it is oversold.

When the %R reading is above -20, then the currency pair is overbought.

A percentage range of below -80 indicates an oversold condition.

Overbought or oversold conditions do not guarantee a trend reversal, but they indicate that the prices are near their recent highs and lows respectively.

Williams %R is important when used to established whether a currency pair will maintain their current momentum or not.

What you need to do to use this indicator is to locate it in your trading platform and click on it. It will automatically display its chart as show below:

Williams %R in Forex trading

In the figure above, the currency pair failed to go past the previous highs in the uptrend, leading to a drop to a new low.

Thereafter, the prices rose again. Some few bearish candlesticks appeared, but were not enough to push the prices back to the previous oversold levels.

That is a loss of bearish momentum.

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