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Williams R indicator, or sometimes called Williams %R, is an indicator that was developed by Larry Williams a famous trader, and it’s the inverse of the fast stochastic oscillator. The stochastic oscillator reflects the level of the close relative to the lowest low. The William %R is also commonly referred to as a momentum indicator. It’s looking for the level of the close, relative to the highest high, opposed to the lowest low such as the fast Stochastic.
Williams R Indicator Explained
Here’s an example on how to use Williams %R. I’m gonna put support resistance levels on price because I feel that’s very important whenever using any indicator. The support resistance we’re using here today is simply off of major swing highs and lows from the past. The market does look at these very often, so they do have a self-fulfilling prophecy to them.
We put in this low here, and as we go forward notice that here could be a buy signal, and here’s where it gets below the so-called oversold zone. There’s a couple of things here to point out. Number one is the candlestick that you get is a pin bar pattern and that is a good candlestick pattern for a low. Then we’ve also got the divergence here. That divergence higher low on Williams R and lower low there, so we’ve got three things to look for.
In trading we’re looking for a preponderance of the evidence. Each one of these things is a piece of evidence and no one thing should be traded by itself because no one thing gives you a probability scenario. We put the other pieces of evidence and wait for them all to align, so here we have three. Support, divergence and a candlestick pattern. Now we have a pretty darn good signal and indeed the market does go up.
The takeaway for today is, always look for uncorrelated variables to align to give yourself a statistical probability. If you found this video helpful, please give it a thumbs up. I don’t charge for these and I don’t run advertising in my videos so these do not generate income. I do them for you, so the best thing you can do is to pay it forward to somebody else by sharing the video. If you have any requests for future videos, like I said, this one is in response to requests, so feel free to type your video request in the comments below.
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