Does your trade have momentum? If you want to know where the momentum of a certain currency pair is relative to its recent opening and closing price, there is nothing better to use than the Williams %R indicator.
This indicator is an oscillator that detects the close of a given pair on its most recent candle relative to the highest and lowest points of that candle. This may be an indication of whether the pair is likely to move higher or lower as time goes on. You can look at it as an extremely sensitive Stochastic indicator, in that it is attempting to determine if the momentum of the trade is higher or lower, but it is doing so only by examining the momentum and movement of the last candle in the trade.
There is a lot to be said for using indicators in this way, but you want to make sure you don’t get too comfortable with them either. There are dangers to always relying on indicators that are less than reliable simply because they are too sensitive to the latest moves of the market. Put another way, you don’t want to put all of your eggs in one basket because that basket may have holes in it.
The Williams %R Indicator Lines
The Williams %R indicator uses the same numbers as the Stochastic to show if a currency is overbought or oversold, but it does so using negative numbers. So, the readings that you get with this indicator range from between 0 to -100.
A reading below -20 indicates that the pair is overbought, and a reading above -80 indicates that it is oversold.
The sensitivity of this indicator is useful when you want to see if the recent momentum that you have picked up on in a certain currency pair is likely to hold into the future. If you believe that this is the case, then you would want to jump in on the trend of course.
However, not all indicators are as useful as the Williams %R indicator at giving you this information. Fortunately, this indicator happens to be great at bringing you that data, and that is why you can rely on it to do what it needs to do to bring you the facts and information you require to make your trades.
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