larry williams percent r indicator

Futures Charts - Technical Analysis Help

Williams' Percent R Indicator

Description:

The Percent R indicator is an overbought/oversold oscillator always based on the close. It is commonly used as a tool to indicate when to buy on dips in a bull market and when to sell on rallies in a bear market. Our Percent R indicator is the inverse of Williams'. Our 40 is Williams' 60, while Our 60 is Williams' 40. This was done to
remain consistent with the standard practice that a high number for an oscillator indicates that the market is overbought, and a low number indicates that the market is oversold.

Conventional Analysis:

Use Percent R to buy on dips when major trend is up. Use Percent R to sell on rallies when major trend is down.

Additional Analysis:

Expect better results using Percent R, and many overbought/oversold type indicators, in a non-trending market than in a market with a clear and established trend. Additionally, Percent R is best used to identify tops in a bear market and
bottoms in a bull market, and can be expected to issue false overbought signals in a bull market. In addition to the current overbought/oversold status, consideration should be given to the number of consecutive bars Percent R spends in either overbought or oversold territory. A higher number of consecutive bars at either extreme increases both the likelihood of a move and the probability that it will be a move of significant magnitude.

Additional References:

Williams, Larry. How I Made $1,000,000 Last Year by Trading Commodities. Windsor Books. New York. 1979.