Momentum Willams %R

The Momentum Willams %R indicator calculates the momentum of the Williams %R oscillator to help traders identify potential market reversals and trend shifts through momentum analysis and divergence detection.

Usage

The Momentum Willams %R is primarily used to identify divergences between price action and momentum. When price continues to make new highs while the indicator makes lower highs (or vice versa), it suggests a weakening trend and a potential reversal.

Traders can also use the integrated Bollinger Bands on the momentum line to identify extreme momentum readings. Points where the momentum line breaks outside these bands are marked with circles, indicating potential exhaustion points. Additionally, the indicator features a built-in moving average of the momentum line, which can serve as a signal line for crossovers.

Details

The script first calculates the standard Williams %R over a user-defined period. It then calculates the momentum by taking the difference between the current Williams %R value and its value n-periods ago.

To provide further context, the indicator applies:

• Bollinger Bands: Applied to the momentum line to identify volatility-adjusted overbought or oversold conditions in momentum.
• Divergence Logic: Uses smoothed price and momentum changes to highlight periods where price and momentum are moving in opposite directions.
• Signal Line: A simple moving average (SMA) of the momentum line to help filter noise and identify trend direction.

Settings

• Show Diverg: Toggles the visibility of the color-coded divergence segments on the momentum line.
• Len Will R%: Sets the lookback period for the initial Williams %R calculation.
• Length Mom: Determines the lookback period used to calculate the momentum of the Williams %R.
• Len BB: Defines the period for the Bollinger Bands applied to the momentum line.
• Mult: Adjusts the standard deviation multiplier for the width of the Bollinger Bands.

FAQ

How do I interpret the colored dots on the indicator? The circles appear when the momentum line crosses outside of the Bollinger Bands. A green dot at the bottom band suggests a potential bullish exhaustion, while a red dot at the upper band suggests potential bearish exhaustion.

What do the green and red segments on the momentum line represent? These segments highlight divergence. A green segment appears when price change is negative but momentum change is positive. A red segment appears when price change is positive but momentum change is negative.

How can I access the Momentum Willams %R? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.