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Williams %R, developed by Larry Williams, is a momentum oscillator measuring where closing price is relative to the high-low range over N periods. Williams %R is similar to Stochastic Oscillator but ranges from -100 to 0 and is inverted.
Williams %R = [(HN - C) / (HN - LN)] × -100 Where: HN = Highest high over N periods LN = Lowest low over N periods C = Current closing price Standard period: N = 14 Range: -100 to 0 -20 to 0 = Overbought zone -100 to -80 = Oversold zone
Standard Williams %R (14 periods): Most commonly used
Short-term Williams %R (7-10 periods): More sensitive, suitable for short-term trading
Long-term Williams %R (20-28 periods): Smoother, reduces false signals
Williams %R Divergence: Price and indicator move in opposite directions, signals reversal
Overbought Signal: Williams %R > -20, price may pull back
Oversold Signal: Williams %R < -80, price may bounce
Falling from Overbought: Williams %R falls below -20 from above, sell signal
Rising from Oversold: Williams %R rises above -80 from below, buy signal
Centerline Cross: Williams %R crossing above -50 is bullish, below is bearish
Bearish Divergence: Price makes new high but Williams %R doesn't (doesn't approach 0), signals decline
Bullish Divergence: Price makes new low but Williams %R doesn't (doesn't approach -100), signals rise
Failure Swing: Williams %R fails to enter overbought or oversold zone, signals weakening trend
Williams %R performs best in ranging markets, effectively identifying short-term overbought/oversold conditions. In strong trends, Williams %R may remain in overbought or oversold zones for extended periods; counter-trend trading should be avoided. More reliable strategy is waiting for Williams %R to return from extreme zones before entering. Williams %R works better when combined with price action analysis, such as overbought/oversold signals near key support/resistance.
Accurate identification of overbought/oversold conditions, quick response, suitable for short-term trading, strong divergence prediction capability, simple and intuitive calculation
Prone to false signals in strong trends, may remain in extreme zones for extended periods, sensitive to price noise, requires combination with trend indicators
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