Williams %R (%R): How to Read It
Williams %R shows where the close sits relative to the high-low range of recent periods, on a scale from 0 to -100. It is a fast momentum oscillator used to spot overbought and oversold conditions.
The formula
Common settings: 14 periods with -20 and -80 levels
How to read it
- Readings from 0 to -20 are considered overbought.
- Readings from -80 to -100 are considered oversold.
- Moves out of extreme zones can signal momentum shifts.
- Very fast, so it reacts quickly to price changes.
- It is essentially an inverted fast stochastic.
Typical signals
- %R rising above -80 after being oversold.
- %R falling below -20 after being overbought.
- Failure to reach a new extreme as early divergence.
Pitfalls to avoid
- Very noisy on short settings.
- Can remain extreme for a long time in trends.
- Negative scale can confuse beginners.
FAQ
Why is Williams %R negative?
It measures distance from the highest high, so values run from 0 at the top to -100 at the bottom.
How is it different from stochastic?
It is mathematically similar to an unsmoothed fast stochastic, just flipped onto a negative scale.
What period is best?
Fourteen is standard, but shorter periods react faster and are noisier.
Works well with
Stochastic Oscillator
The Stochastic Oscillator compares the current close with the high-low range over a recent period. It shows where price sits within that range on a 0 to 100 scale.
γ°οΈSimple Moving Average
The Simple Moving Average adds up the last N closing prices and divides by N to create a smooth line. It filters out daily noise so the underlying direction of the trend is easier to see.
π‘οΈRelative Strength Index
The Relative Strength Index measures the speed and size of recent gains versus losses on a scale from 0 to 100. It helps spot when a market may be stretched too far in one direction.