What is William's %R Indicator similar or different to Stochastic Indicator? And overbought and oversold signals

What is William's %R Indicator similar or different to Stochastic Indicator? And overbought and oversold signals

This indicator is named after its inventor, Mr. Larry William, based on the same concept as Stochastic, only in creating a graph, it is inverted, that is, the Scale will climb from 0 down to 100 or there is a small value above it. So the overbought area means the area above the 20 line and the oversold area below the 80 line. Instead, it measures the distance between the closing price and the high in N days, but generally 10 days (N = 10, unlike the 5-day Stochastic indicator ).


William's %R indicator is almost the same as Stochastic indicator, so some people refer to William's %R as 10-day Stochastic. In the case of William's %R, we use the 80, 20 line instead of the 70, 30 line of the previous oscillator because William's %R is very sensitive. This makes it easy to fake signals, thus expanding the range. In fact, William's himself offered it below 95% as a buy signal. (Don't forget that the values ​​run upside down from 0 to the highest and chase down to the lowest 100) and above 10% is a sell signal.

In fact, William's does not offer a moving average as a signal in the same way as Stochastic, but some analysts use a moving average, but because William's %R is a Stochastic, so it runs. Very fast Until sometimes giving an error signal some technical analysts therefore use it only factor with other technical tools only. You can learn more about William's %R indicator from S#.Terminal.

For example, using William's %R to stock prices is shown in the example in the image below where an arrow below or equal to 95 represents a buy or hold moment according to the above principle. Or equal to 10 as in the example, it will be a moment to sell or drain the stock. However, if you observe carefully It can be seen that the adjustment of William's %R sometimes the share price does not respond much. For example, around number 1, 2, and 3, which is until the stock price drops to the end. Then bounced up, William's %R hit the -100 line 3 times (it is said that if William's %R comes in near zero or 100 and there is a drop or rise, the price has a chance to go down or In addition) William %R can do Divergence with the price as well. This will make the signal more significant.

william%R 02.png

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