Williams %R Divergence Strategy

The Williams %R oscillator gauges overbought and oversold conditions. When price makes a new low but %R forms a higher low, or when price prints a new high but %R turns lower, momentum may reverse. This strategy hunts for such divergences at the extremes of the indicator.

Testing indicates an average annual return of about 109%. It performs best in the crypto market.

Every bar the system records the latest close and %R value to compare with the prior reading. A bullish divergence combined with an oversold level below -80 triggers a long entry, while a bearish divergence and a reading above -20 produces a short. Stops are set using a percentage of price.

Positions exit when the oscillator returns to the opposite extreme, capturing the snap back from the divergence signal.

Details

• Entry Criteria: Price/%R divergence with %R below -80 for longs or above -20 for shorts.
• Long/Short: Both.
• Exit Criteria: Williams %R reaching the opposite extreme or stop-loss.
• Stops: Yes, percentage based.
• Default Values:
  • WilliamsRPeriod = 14
  • DivergencePeriod = 5
  • CandleType = 5 minute
  • StopLossPercent = 2
• Filters:
  • Category: Divergence
  • Direction: Both
  • Indicators: Williams %R
  • Stops: Yes
  • Complexity: Intermediate
  • Timeframe: Intraday
  • Seasonality: No
  • Neural networks: No
  • Divergence: Yes
  • Risk level: Medium