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Today we are describing or explaining the Oscillator - WILLIAMS %R (%R)
Williams %R (%R) is a momentum-driven oscillator prominently employed in technical analysis, primarily to pinpoint overbought and oversold conditions. This metric hinges on a comparison between the present closing price and the highest high over a user-defined retrospective period. %R exhibits oscillations within the range of 0 to -100 (take note of the negative values), with readings nearing zero signifying increased overbought conditions and readings nearing -100 indicating oversold conditions. Typically, %R serves to generate setups founded on both overbought and oversold conditions as well as broader momentum shifts.
As mentioned earlier, %R's core role revolves around assessing momentum. This indicator oscillates within a set range between 0 and -100. Williams himself established overbought parameters within the range of 0 to -20 and oversold parameters between -80 and -100. It's vital to understand that these values represent traditional examples. Technical analysts may find it advantageous to customize parameters based on the specific instrument under scrutiny. The determination of broader or narrower overbought and oversold levels may be warranted, contingent on historical analysis.