Indicator values ranging between 80 and 100% show that the market is oversold. Indicator values ranging between 0 and 20% show that the market is overbought. When the indicator is in the upside down scale, its values usually are assigned a minus symbol (for example -30%). During analysis one may ignore the minus symbol.
All overbought/oversold indicators obey one rule: act according to the signal when prices turn happens. For example, if an overbought/oversold indicator shows an overbought condition, it is better to wait until the prices turn down before executing a sell deal.
Williams Percent Range indicator can foreseen prices reversals. The indicator almost always forms a peak and turns in backward direction a few days before the price reaches its peak and goes down. Thus, Williams Percent Range forms a trough and turns up a few days before the price goes up.
TBelow is the formula of the %R indicator calculation, which is very similar to the Stochastic Oscillator formula:
%R = (HIGH(i-n)-CLOSE)/(HIGH(i-n)-LOW(i-n))*100
CLOSE - is todays closing price;
HIGH(i-n) - is the highest high over a number (n) of previous periods;
LOW(i-n) - is the lowest low over a number (n) of previous periods.