Williams %R

Overview

Williams %R is a momentum oscillator that measures where the current close sits relative to the highest high over a lookback period — essentially the inverse of the Stochastic Oscillator, excelling at identifying reversal zones. It is most effective in range-bound forex and stock markets where clear support and resistance levels exist. Combine %R with trend-following strategies to take only high-probability entries in the direction of the dominant trend.

How It Works

%R = (Highest High − Close) / (Highest High − Lowest Low) × −100. Default period is 14. Readings from 0 to −20 are overbought; −80 to −100 are oversold. Note the negative scale.

Key Signals

• %R crossing above −80 from oversold = potential bullish reversal.
• %R crossing below −20 from overbought = potential bearish reversal.
• %R divergence from price is a strong early warning of trend exhaustion.
• Multiple touches of the −50 line and rejection suggest the trend is losing conviction.

Common Mistakes

• Confusing the inverted scale — %R = −10 is overbought (near the top), not oversold.
• Trading reversals in strong trends — %R stays overbought/oversold for extended periods.
• Using %R as a standalone signal without price structure confirmation.