Williams %R

Shows relationship of the close price relative to the high-low range over a set period of time. Readings from 0 to -20 are considered overbought, readings from -80 to -100 oversold.

For confirmation that the price reversal from overbought or oversold levels has occured cross above or below -50 is used.

For longer period insight use 28-day %R as more reliable. When the 28-day %R moves to overbought or oversold levels, it typically remaines there for an extended period and the stock continues its trend.

Stochastic Oscillator

Shows the location of the current close price relative to the high/low range over a set number of periods. Readings below 20 are considered oversold and readings above 80 are considered overbought.

For reliable signals wait for a divergence to develop from overbought or oversold levels. Once the oscillator reaches overbought levels, wait for a negative divergence to develop and then a cross below 80. This usually requires a double dip below 80 and the second dip results in the sell signal. For a buy signal, wait for a positive divergence to develop after the indicator moves below 20. This will usually require a trader to disregard the first break above 20. After the positive divergence forms, the second break above 20 confirms the divergence and a buy signal is given.

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