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.
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.
- 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