Williams %R

Williams %R is a momentum oscillator that measures where the close sits relative to the high-low range over a lookback period. Developed by Larry Williams, it identifies overbought and oversold conditions.

$$\%R = \frac{Highest\ High - Close}{Highest\ High - Lowest\ Low} \times (-100)$$

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Missing Data

A closed-market bar (weekend, holiday) or any bar with a null High or Low is not computed — it is a genuine gap, output as None, never a sentinel value and never carried forward from the last valid bar. The Highest High and Lowest Low are found over the observed-bar subsequence: an "n-period window" means n observed bars, with market-closed gaps bridged (Friday adjacent to the following Monday). The first n observed bars are warm-up and are also None. A null Close alone voids only that bar's own value — the High/Low window it sits in still counts for later bars. A flat window (Highest High equals Lowest Low, so the price range is zero) is a genuinely undeterminable ratio and is also None, never 0 or -50. Output length always equals input length; only the values at gap, warm-up, and flat-window slots differ. Live requests return exactly one datapoint — None when that datapoint's window is not yet fully observed.

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How It Works

flowchart TD
    subgraph Input["Price Data"]
        H["High"]
        L["Low"]
        C["Close"]
    end
    
    subgraph Calc["Over n periods"]
        HH["Find Highest High"]
        LL["Find Lowest Low"]
        RANGE["Range = HH - LL"]
        POS["Position = HH - Close"]
    end
    
    subgraph Output["Result"]
        DIV["Position / Range"]
        MULT["× -100"]
        WR["Williams %R (-100 to 0)"]
    end
    
    H & L --> HH & LL --> RANGE
    C & HH --> POS
    POS & RANGE --> DIV --> MULT --> WR

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Interpreting Williams %R

%R Value	Interpretation
-20 to 0	Overbought zone
-80 to -20	Neutral zone
-100 to -80	Oversold zone

flowchart LR
    subgraph Zones["Williams %R Zones"]
        OB["-20 to 0<br/>Overbought"]
        N["-80 to -20<br/>Neutral"]
        OS["-100 to -80<br/>Oversold"]
    end
    
    OB --> N --> OS

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Trading Strategies

1. Overbought/Oversold Exits

Zone	Condition	Action
Overbought	%R > -20 then drops below	Potential sell
Oversold	%R < -80 then rises above	Potential buy

2. Failure Swings

When %R reaches an extreme but fails to make a new extreme on the next attempt, it signals weakening momentum.

3. Divergence

Pattern	Price	%R	Implication
Bullish	Lower low	Higher low	Reversal up
Bearish	Higher high	Lower high	Reversal down

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Williams %R vs Stochastic

Aspect	Williams %R	Stochastic %K
Range	-100 to 0	0 to 100
Formula	Inverted	Standard
Overbought	> -20	> 80
Oversold	< -80	< 20
Relationship	%R = %K - 100	%K = %R + 100

Williams %R is essentially an inverted Stochastic Oscillator.

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Common Parameters

Parameter	Default	Description
Period	14	Lookback for high/low range

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Advantages

• Leading indicator — Can signal reversals early
• Simple — Easy to calculate and interpret
• Clear zones — Well-defined overbought/oversold levels
• Works in ranges — Effective in sideways markets

Disadvantages

• False signals — Stays at extremes in strong trends
• Inverted scale — -100 to 0 can be confusing
• No smoothing — Can be choppy without additional filtering
• Trend-blind — Doesn't account for trend direction

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Further Reading

• Williams %R - Investopedia
• Williams %R - Fidelity

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Indicator Assessment

%%{init: {'theme': 'base', 'themeVariables': { 'cScale0': '#2563eb', 'cScale1': '#7c3aed'}}}%%
quadrantChart
    title Williams %R Indicator Assessment
    x-axis Low Complexity --> High Complexity
    y-axis Low Reliability --> High Reliability
    quadrant-1 High Value
    quadrant-2 Specialized
    quadrant-3 Limited Use
    quadrant-4 Accessible
    Stocks: [0.25, 0.60]
    Crypto: [0.25, 0.55]

Dimension	Stocks	Crypto	Notes
Popularity	7/10	6/10	Well-known oscillator; often overshadowed by RSI and Stochastic
Reliability	6/10	5.5/10	Effective in ranging markets; prone to false signals in strong trends
Complexity	2.5/10	2.5/10	Simple formula and interpretation; inverted scale can confuse beginners
Versatility	6/10	6/10	Works across timeframes but best in sideways markets
Recent Interest	5/10	5/10	Steady but modest usage; RSI often preferred as the go-to momentum oscillator