The Williams R indicator is an MT4 momentum indicator that detects overbought or oversold market conditions. Every trend following trader must know how to evaluate market momentum. This helps you predict future trends and assess the sentiment behind price movements.
The indicator closely monitors all market conditions and helps you make the best selling/buying decisions. We have found the indicator to be well suited for intraday/crossover trading of stocks and forex. This guide explains how to use Williams R signals in MT4 to identify potential trading opportunities.
How to trade with the Williams R MT4 indicator
Williams R uses its overbought/oversold signals to predict valid levels of price volatility. An overbought market is one in which the indicator value exceeds -20. If the indicator value is below -80, the market is considered overbought. To identify possible buying/selling opportunities, we will match the Williams-R momentum signal to the current price action. If the price moves down after reaching a lower high in an overbought stock market, this is a good opportunity to go short.
The current trend line support is being held by the price. At some point price returned to the trend line and formed a bullish candle above the support line. During this time, the indicator fell below -80, indicating an oversold market. When the value reaches -80, the correction period ends. This means that the price will be ready to return to a bullish trend.
Williams R analyzes in detail the highs and lows of the market to help identify valid levels of price volatility. It works on shorter time frames and can also be used on monthly, weekly or daily charts to help traders predict long-term price targets. Experts also use it to identify profitable trading opportunities in MT4.