An oscillator measuring where the close sits relative to the highest high of the lookback period, plotted on an inverted scale from 0 to -100.
Larry Williams's indicator is arithmetically almost identical to the fast stochastic-oscillator, just flipped and unsmoothed. A reading of -20 means the close is near the top of the recent range; -80 means near the bottom.
Because it is unsmoothed it reacts immediately, which makes it useful for spotting the exact bar on which a market stops making new extremes within its range.
It carries all the usual oscillator caveats, and the inverted scale adds a chance of misreading direction. Its practical value over a stochastic is minimal; choosing between them is largely habit, and neither escapes the fact that both saturate in trends.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The stochastic oscillator. The stochastic shows where each close sits inside the recent high-to-low range, on a scale of 0 to 100. Readings above 80 mean closes are hugging the top of that range and below 20 the bottom; the circle marks the fast line turning up through the slow one.Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.
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