Testing Combined Williams %R Levels for Currency Basket Signals

Summary

This article tests an overbought and oversold reversal pattern for baskets of currency pairs using a combined Williams %R indicator. It smooths the indicator with a longer period and examines daily, four-hour, and hourly charts. A signal is defined when the indicator crosses back through an extreme level after a candle closes. To study candidate thresholds, the method records the distribution of indicator extremes using ZigZag-based tools, then evaluates basket trades across historical data.

The article presents the work as an initial research stage, with results intended to inform threshold selection and further signal filtering. It notes that an indicator reading returning to zero is not a sufficient exit rule and that loss limits remain unresolved. It suggests testing basket-level stop losses and trailing profits in account currency, but does not establish that this approach is robust. The evidence is historical and specific to the tested baskets and timeframes, so it does not demonstrate general profitability.

Key ideas

• The proposed entry occurs when combined Williams %R crosses back from an extreme after a candle closes.
• The study examines daily, four-hour, and hourly data for currency baskets.
• A ZigZag-based procedure counts indicator extremes across threshold intervals.
• Returning the combined indicator to zero may not provide an adequate exit rule.
• The article identifies basket-level loss limits and profit trailing as topics for further testing.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.