‏One of the well-known general signals that is often abbreviated to only the word “overbought,” while its usefulness is greater than that:

Williams %R

The idea behind the indicator, briefly:
It measures where the current close sits within the range of the highest high and the lowest low over a certain number of candles.

In simpler terms:
The indicator asks you:
Is the price closing near the top of the range?
Or near the bottom?

For this reason, it is used a lot for:
• Reading short-term momentum
• Noticing overbought and oversold
• Assessing the strength of the close within the range
• Understanding whether buyers or sellers are currently controlling the move

What does it practically provide you?
• Gives you a quick read of the price’s position within the range
• Helps you know whether the close is strong or weak
• Benefits choppy markets more than many trend indicators
• May help you catch early changes if you use it with the right context
• Considered a relatively fast indicator, so it needs a good understanding so it doesn’t overwhelm you with too many signals

But it’s very important:
Like the rest of fast momentum indicators,
don’t deal with it this way:
“Entered overbought = direct reversal”

Because the market may stay in overbought zones for a while if the move is truly strong.

Where do I see its real value?
Not just in knowing that the market is “high or low,”
but in understanding:
How does the price close within its most recent range?
And does this close reflect real strength, or just a short-term move?

Its best use:
• With support and resistance
• With a sideways or clean ranging market
• With price confirmation
• With a directional filter if you use it in a trending market
• As a decision-support tool, not as a single standalone decision

Conclusion:
If you want a fast and clear indicator for reading the close’s position within the range, Williams %R is a very useful tool,
but only if you use it with context… not mechanically...
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