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Friday, October 01, 2010 3:33:24 PM
bg-The Wm %R is a good indicator, but , IMO, is a bit early in it's signals ( which could be a good thing !!) I used to use it, and when used in conjunction with the RSI, it is a good combination.
Here's something on it:
It is important to remember that overbought does not necessarily imply time to sell and oversold does not necessarily imply time to buy. A security can be in a downtrend, become oversold and remain oversold as the price continues to trend lower. Once a security becomes overbought or oversold, traders should wait for a signal that a price reversal has occurred. One method might be to wait for Williams %R to cross above or below -50 for confirmation. Price reversal confirmation can also be accomplished by using other indicators or aspects of technical analysis in conjunction with Williams %R.
Most chartists I know use RSI as the overbought / sold indicator. Since it "lags" the Wm, it tends not to give early false signals.
Try using it in combination with RSI to get a "feel" for how they complement each other. The Wm will be the "canary in the gold mine" for the RSI.
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