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This indicator was created by Larry Williams and shows overbought and oversold levels, using a negative range of 0 to -100.
An Example of the Williams %R
How to Interpret the Williams %RM
When the Williams %R falls below the oversold level of -80.
A Bullish Divergence, where the price creates a lower low and the indicator creates a higher high.
Or when a Failure Swing presents it self.
When the Williams %R rises above the overbought level of -20.
A Bearish Divergence, where the price creates a higher high and the indicator creates a lower high.
Or when a Failure Swing appears.
How to Calculate the Williams %R
%R = (Highest High - Close)/(Highest High - Lowest Low) * -100
Lowest Low = lowest low for the look-back period
Highest High = highest high for the look-back period
%R is multiplied by -100 correct the inversion and move the decimal.
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Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.