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Can be useful at times like this. The %R is a measure of how overbought or oversold a market is. Unsurprisingly, we’re now in a position where gold is about to encounter strong support with a very oversold %R, whilst DXY is right up against strong resistance in the 95 region with an overbought %R. Does this mean gold HAS to go up, and the dollar HAS to go down ? No, but it does mean the odds are stacked that way. As you can see on the dollar chart below, %R can remain overbought for a long time (or oversold). I would suggest that it can remain overbought for a long time in a bull market, and oversold for a long time in a bear market. The dollar was coming off multi year lows when it last remained overbought for a long time, without price retreating. Is that the case now ? Erm….no. Here are the charts, what do you think ?
Who is going to blink first ?
Bears
🙂
I hope so Fully. I’m pretty confident we’re at/very near the low for gold here, but I’d be lying if I said I wasn’t worried at all.
Wall of Worry
🙂
Something like that, lol.
Williams is a good one.
And yours is a weekly not a daily. That’s more helpful.
But I would also say no indicator works in isolation.
And weeklies (even together with dailies) don’t tell the whole picture.
Moreover, inferences from smaller timeframes are trumped by action at higher timeframes.
Which is how traders get run out of town when their low degree tools that work for a time, suddenly stop working. They ignored a regime change at higher degree.
GLD monthly is NOT encouraging here. Lets see what July says, but don’t hold your breath.
I use Williams %R (21,-100) all the time, particularly on daily charts, and together with Slow Stochastics I find it one of the best TA indicators.
However when it reaches the oversold condition, as is gold at the moment (reaching -100) it will certainly mean a bounce, but almost as certain is that it will re-test that level 7-10 calendar days from that time.
The other thing is that Williams %R (-21,100) can stay in the overbought or oversold position for some time on the daily chart, waiting for the weekly to catch up.
Here is the chart from 2013 that I have been talking about for some time….
IMO we have not seen the bottom yet!
https://www.barchart.com/futures/quotes/GCY00/technical-chart?plot=CANDLE&volume=contract&data=DO&density=M&pricesOn=1&asPctChange=0&logscale=0&startDate=2013-04-01&endDate=2013-07-31&daterange=specific&indicators=WILLR(21,100);SMA(10);SMA(50);STOSL(14,3)&sym=GCY00&grid=1&height=500&studyheight=100