Williams Percent R: Overbought and Oversold Signals

Summary

Williams Percent R is presented as a bounded overbought and oversold indicator. It compares the latest close with the highest high and lowest low over a lookback window, then scales the close’s position within that range to a negative percentage scale. The example uses a 14-period window and marks −20 and −80 as reference levels for potential overbought and oversold conditions.

The document cautions against treating those levels as automatic buy or sell triggers. It recommends waiting for price direction to turn, with MACD offered as one way to look for a change. It also notes that a peak and reversal in Percent R may precede a price decline. These are qualitative observations: no market, testing method, or performance evidence is provided, and the indicator can remain at extreme readings while a move continues. The text mainly explains the calculation and a possible confirmation approach.

Key ideas

• Williams Percent R locates the close within the recent high-low range and expresses it on a negative percentage scale.
• The example uses a 14-period lookback and highlights −20 and −80 as reference levels.
• The document suggests waiting for a turn in price direction before acting on an extreme reading.
• MACD is mentioned as one possible way to identify a directional change.
• The document provides no empirical test showing that these signals are profitable or reliable.

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