Williams %R

◙ Primary Use: Identifying Overbought/Oversold Market Levels

◙ Trading: Detecting Trend Continuation / Momentum Failures

◙ Standard Settings: 14 Periods

Introduction to Williams %R

Developed by Larry Williams, Williams %R is a momentum oscillator widely used for identifying overbought and oversold market conditions, as well as spotting momentum failures.

• Williams %R oscillates between 0 and -100.

• It measures the level of the closing price relative to the highest high over a specified period:

  • When Williams %R is near 0, it indicates the price is trading close to the highest high of the lookback period.

  • When Williams %R is near -100, it indicates the price is trading close to the lowest low of the lookback period.

• The Stochastic Oscillator is similar, showing the closing price's level relative to the lowest low (see more under Stochastic Oscillator). (► more about the Stochastic)

• Williams %R and the Fast Stochastic Oscillator yield the same values, differing only in their scaling.

 Calculating Williams %R

■ Williams % R = HC / HL * - 100

Where,

• HC = Highest High (in R Periods) – Last Closing Price
• HL = Highest High (in R Periods) – Lowest Low (in R Periods)

Trading with Williams %R

Williams %R compares the closing price to the highest high over a set period and is helpful in:

• Identifying overbought and oversold market conditions

• Measuring trend momentum

• Detecting momentum continuation or momentum failure

Note: Williams %R and the Fast Stochastic Oscillator provide the same readings, only with different scaling.

Overbought / Oversold Levels

• 0 to -20: Indicates overbought conditions in ranging markets. In trending markets, this may signal a short-term correction before the trend resumes.

• -80 to -100: Indicates oversold conditions in ranging markets. In trending markets, this may also signal a short-term correction.

• The midpoint level, -50, is often considered a key reference point.

Momentum Failures

A momentum failure occurs when an asset that was previously overbought or oversold fails to return to its prior extremes. This may suggest a potential trend reversal or significant move in the opposite direction.

Platform Setup

To add Williams %R in MetaTrader 4 or 5, navigate to:

□ GO TO → INDICATORS → OSCILLATORS → WILLIAMS' PERCENT RANGE

□ STANDARD SETTINGS → 14

■ %R Larry Williams

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