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Williams %R

Technically a stochastic, Williams %R signals overbought and oversold conditions by calculating the relationship of the close to a range of prices. The scale in Williams %R is reversed, running from -100 to 0. When the %R line is above -20, overbought conditions exist; conversely, when the %R line is below -80, oversold conditions exist.

Formula:

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Where:

n = number of periods

highn = highest high in n periods

lown = lowest low in n periods

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see, Larry R. Williams, How I Made $1,000,000 Trading Commodities Last Year, 3rd Ed., Monterey CA: Conceptual Management, 1979; see also, Murphy, John J., Technical Analysis of the Futures Markets, A Comprehensive Guide to Trading Methods and Applications, New York: New York Institute of Finance, A Prentice-Hall Company, 1986, pp. 309-310.