One technical indicator suggested that the current Bitcoin sell-off has gone too far — but was it a false signal?
As reported by Bloomberg, the indicator in question is the Williams %R Indicator.
Also known as the Williams Percent Range, Williams %R is a momentum indicator which travels between a range of 0 and -100 in an effort to identify overbought and oversold levels. Skilled traders may use this indicator (among others, of course) to assist in the identification of entry and exit points.
Here is what the indicator showed late last week, courtesy of Bloomberg:
Here is what the Williams %R Indicator looks like today, at the time of this writing:
At the time of Bloomberg‘s report, Bitcoin was hanging out in oversold territory.
Now, Bitcoin has managed to move back within the indicator’s ‘normal’ range.
No Indicator is Perfect
It is important to note that the Williams %R indicator is, like virtually every technical indicator, prone to false signals — which may or may not have occurred at the time of Bloomberg‘s report. Because of this, it is always recommended that traders utilize a variety of tools and indicators when making decisions.
Regarding Bitcoin’s current price, speculation has emerged that the market leader may face a new round of intense selling pressure as Mt. Gox investors prepare to receive $1 billion worth of bitcoin in the coming weeks.
What do you think about the Williams %R Indicator? Do you think it flashed a false signal late last week? What other technical indicators do you like to use? Let us know your thoughts in the comments below!
Images courtesy of Shutterstock, Bloomberg, TradingView.