Williams' %R [W%R]

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The Williams' %R function calculates the difference between the current closing price of a security and its highest high price, relative to its lowest low price for a given period of time. Parameters ------------------ Close           The closing price of the security for each given day. High            The high price of the security for each given day. Low             The low price of the security for each given day. Period          The number of bars of data to include in the calculation, including the current value.                     For example, a period of 3 includes the current value and the two previous values. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including other price values and averaged prices. Indicator Value ------------------------ The Williams' %R indicator is very similar to the Stochastic Oscillator, except that where the information in the Stochastic Oscillator relates the closing price to the lowest low, the Williams' %R relates the closing price to the highest high. Also, the Williams' %R does not contain any internal smoothing (slowing). The Williams' %R indicator is calculated by subtracting the closing price of a security from its highest high price over the given period. This value is then divided by the difference between the highest high price and the lowest low price over the same price. Finally, the value is traditionally multiplied by -100 for ease of charting. Note that this causes to the value to be charted "upside-down". The resultant value is a reverse percent rating for the closing price of the security, relative to the trading range between its recent highest and lowest prices. A value of zero indicates it closed at its highest recent high. A value of -100 indicates it closed at its lowest recent low. The value at the beginning of a data series is not defined until there are enough values to fill the given period. Usage ----------- The Williams' %R indicator is typically used to determine overbought/oversold levels. Values above -20 indicate the security may be overbought. Values below -80 indicate the security may be oversold. This indicator can also be used for market timing. Peaks and valleys can often be seen to lead price reversals by several days. See the sample entry/exit systems for an example using the Williams' %R. In addition, divergences between this value and the price can be examined. If prices are rising and making new highs, but the indicator is not making new highs, a price correction may occur in the near future. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis. It was originally developed by Larry Williams.