Williams percent range
A momentum oscillator similar to the Stochastic Oscillator but scaled −100 to 0, measuring the close relative to the recent high-low range. Near 0 signals overbought, near −100 oversold.
What the numbers mean
The lookback is the number of bars whose high-low range the current close is measured against, plotted on an inverted −100 to 0 scale: 0 means the close is at the very top of the range, −100 at the very bottom. It is the stochastic %K calculation with the sign flipped and no smoothing.
- 14 — the range lookback, the same window the stochastic uses
- −20 — overbought; −80 — oversold
- 0 — the close is at the very top of the range; −100 — at the very bottom
- The scale is inverted, which is the only real difference from stochastic %K
How it is used
Readings above −20 mark overbought and below −80 oversold. A refinement many traders prefer: after a reading above −20, wait for price to fall a further few percent before treating it as a signal, which filters out the strongest trends.
- Above −20 → stretched to the upside
- Below −80 → stretched to the downside
- Larry Williams' own refinement: after an overbought reading, wait for price to fall a few percent before acting
How it relates to everything else
Williams %R is the fast stochastic's %K with the sign flipped, so the two are effectively the same measurement displayed differently. It is unsmoothed, which makes it quick and noisy — it reaches its extremes constantly, and in a real trend it can sit above −20 for weeks.
- Mathematically the inverse of stochastic %K
- Needs a trend filter — a 200 SMA or ADX — more than most oscillators
- Pairs well with volume, since exhaustion usually shows there first
What to watch for
Unsmoothed and fast, it reaches its extremes constantly. In a genuine trend it can sit above −20 for weeks while price keeps climbing.