Williams %R
Overview
Williams %R is a momentum oscillator developed by Larry Williams that measures the current closing price relative to the highest high over a specified lookback period. It ranges from 0 to -100, with readings above -20 indicating overbought conditions and readings below -80 indicating oversold conditions. Williams %R is closely related to the Stochastic oscillator but inverted, making it particularly responsive to price reversals.
Key Concepts
Range: 0 to -100. Overbought: above -20. Oversold: below -80. Measures close relative to the highest high of the lookback period. Faster than Stochastic, making it ideal for timing entries. Default lookback period is 14. Failure swings (indicator reverses before reaching the opposite extreme) are strong signals.
Entry Signals
Enter long when Williams %R rises above -80 from oversold territory with a bullish reversal candle. Buy on bullish divergence — price making a lower low while %R makes a higher low. Look for %R failure swings where the indicator fails to reach -80 during a pullback, signalling underlying strength. Enter when %R crosses above -50 (the midline) in a confirmed uptrend for momentum confirmation.
Exit Signals
Exit longs when %R exceeds -20 and begins turning down from overbought territory. Close positions on bearish divergence — price making higher highs while %R makes lower highs. Take profits on %R failure swings at the overbought end where it fails to reach -20. Trail exits while %R remains above -50 in a trending environment.
Best Timeframes
5M, 15M, 1H, 4H
Pro Tips
Williams %R is most effective when used for entry timing within a trend established on a higher timeframe — use the daily trend direction and %R on the 1H for precise entries. In strong trends, %R can remain overbought/oversold for extended periods; do not blindly fade these readings. Combine %R with support/resistance levels for the highest-probability reversal signals.
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