Williams %R

Williams %R (Williams Percent Range) is a momentum oscillator developed by Larry Williams that measures overbought and oversold levels. The indicator oscillates between 0 and -100, comparing the current closing price to the highest high over a specified lookback period (typically 14 periods). The formula is: %R = (Highest High - Close) / (Highest High - Lowest Low) × -100. Readings above -20 indicate overbought conditions, while readings below -80 indicate oversold conditions. Williams %R is mathematically similar to the Stochastic Oscillator but is inverted and uses an unsmoothed line, making it more sensitive and faster to react to price changes. Trading signals include: readings reaching oversold territory (-80 to -100) and then moving above -80 (bullish), readings reaching overbought territory (0 to -20) and then falling below -20 (bearish), and divergences between %R and price. Like other momentum oscillators, Williams %R works best in range-bound markets. During strong trends, the indicator can remain in overbought or oversold territory for extended periods, which actually confirms the trend's strength rather than signaling reversal.