Williams %R is a momentum oscillator developed by Larry Williams that measures the current closing price relative to the highest high over a specified lookback period. It ranges from 0 to -100, with readings above -20 indicating overbought conditions and readings below -80 indicating oversold conditions. Williams %R is closely related to the Stochastic oscillator but inverted, making it particularly responsive to price reversals.
Range: 0 to -100. Overbought: above -20. Oversold: below -80. Measures close relative to the highest high of the lookback period. Faster than Stochastic, making it ideal for timing entries. Default lookback period is 14. Failure swings (indicator reverses before reaching the opposite extreme) are strong signals.
Enter long when Williams %R rises above -80 from oversold territory with a bullish reversal candle. Buy on bullish divergence — price making a lower low while %R makes a higher low. Look for %R failure swings where the indicator fails to reach -80 during a pullback, signalling underlying strength. Enter when %R crosses above -50 (the midline) in a confirmed uptrend for momentum confirmation.
Exit longs when %R exceeds -20 and begins turning down from overbought territory. Close positions on bearish divergence — price making higher highs while %R makes lower highs. Take profits on %R failure swings at the overbought end where it fails to reach -20. Trail exits while %R remains above -50 in a trending environment.
5M, 15M, 1H, 4H
Williams %R is most effective when used for entry timing within a trend established on a higher timeframe — use the daily trend direction and %R on the 1H for precise entries. In strong trends, %R can remain overbought/oversold for extended periods; do not blindly fade these readings. Combine %R with support/resistance levels for the highest-probability reversal signals.
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The Average Directional Index quantifies trend strength on a scale from 0 to 100, regardless of direction. Developed by J. Welles Wilder, ADX is derived from two directional movement indicators (+DI and -DI) that measure bullish and bearish pressure respectively. A rising ADX above 25 signals a strengthening trend, while ADX below 20 indicates a ranging or trendless market — making it an invaluable filter for choosing between trend and range strategies.
The Ichimoku Kinko Hyo (Ichimoku Cloud) is a comprehensive indicator system that defines support and resistance, identifies trend direction, gauges momentum, and generates trading signals — all in a single glance. Developed by Goichi Hosoda, the system consists of five lines and a shaded cloud (Kumo) that projects into the future, providing a uniquely forward-looking view of market equilibrium.
The Stochastic RSI applies the stochastic oscillator formula to RSI values rather than raw price data, creating a more sensitive momentum indicator that oscillates between zero and one. By measuring where the current RSI sits relative to its own range over a lookback period, the Stochastic RSI generates faster overbought and oversold signals than either the stochastic or RSI alone, making it particularly useful for timing entries within established trends.