Williams %R is a momentum oscillator developed by Larry Williams that measures overbought and oversold levels. It shows where the current close is relative to the high-low range over a lookback period. Williams %R ranges from 0 to -100, with readings above -20 indicating overbought and below -80 indicating oversold conditions. It’s essentially an inverted Stochastic oscillator.
- Ranges from 0 (highest) to -100 (lowest)
- Above -20 = overbought; Below -80 = oversold
- Inverted version of Stochastic oscillator
How Williams %R Works
Williams %R shows close position within recent range:
Williams %R Formula:
%R = ((Highest High - Close) / (Highest High - Lowest Low)) × -100
Example (14-period):
Highest High: $110
Lowest Low: $90
Current Close: $105
%R = ((110 - 105) / (110 - 90)) × -100
%R = (5 / 20) × -100
%R = -25
Interpretation:
Close is 75% up from low (only 25% from high)
Reading is overbought territory (above -20)
Quick Reference: Williams %R Levels
| %R Range | Condition | Interpretation |
|---|---|---|
| 0 to -20 | Overbought | Price near highs |
| -20 to -80 | Neutral | Price mid-range |
| -80 to -100 | Oversold | Price near lows |
Example: Trading Williams %R
Williams %R Oversold Bounce:
| Day | Price | %R | Signal |
|---|---|---|---|
| 1 | $100 | -45 | Neutral |
| 5 | $92 | -85 | Oversold zone |
| 8 | $88 | -95 | Deep oversold |
| 10 | $91 | -75 | Exits oversold, BUY |
| 15 | $100 | -30 | Recovering |
| 20 | $108 | -15 | Overbought, watch |
Williams %R measures where price closes relative to its recent range. Readings above -20 are overbought; below -80 are oversold. Trade when %R exits extreme zones. It’s an inverted Stochastic—same concept, different scale.
Williams %R Trading Strategies
Oversold/Overbought Exit
Buy when %R rises above -80 from below (exits oversold). Sell when %R falls below -20 from above (exits overbought).
Failure Swings
%R fails to reach -20/-80 on second attempt while price makes new high/low = divergence signal.
With Trend
In uptrends, buy oversold readings. In downtrends, sell overbought readings.
Zero-Line Crossover Alternative
Trade when %R crosses -50 for momentum shifts (less common).
Williams %R vs Stochastic
| Feature | Williams %R | Stochastic |
|---|---|---|
| Scale | 0 to -100 | 0 to 100 |
| Overbought | Above -20 | Above 80 |
| Oversold | Below -80 | Below 20 |
| Signal line | No | Yes (%D) |
| Interpretation | Same | Same |
Interpreting %R Readings
%R = 0
Close equals the highest high. Maximum bullish.
%R = -100
Close equals the lowest low. Maximum bearish.
%R = -50
Close at midpoint of range. Neutral.
Common Mistakes
-
Selling at -20 in uptrends – Strong trends stay overbought. Don’t fight the trend.
-
No confirmation – Wait for %R to EXIT the zone, not just enter it.
-
Ignoring divergences – Price/indicator divergences are the best signals.
-
Wrong period – Match the lookback to your trading timeframe.
How JournalPlus Tracks Williams %R
JournalPlus logs Williams %R readings at entry, helping you analyze whether overbought/oversold timing improves your trading results.
