Williams %R: where is the close in the range?
Williams %R shows where the last close is within the range between the high and low of the last 14 candles. It fluctuates between 0 and -100; above -20 means a close near the top of the range, below -80 means a close near the bottom.
In the panel below the chart above, you see a line fluctuating between 0 and -100: this is Williams %R. There are two horizontal lines in the panel at the -20 and -80 levels. The inverted scale might be surprising at first: 0 is the top, -100 is the bottom.
The indicator's question is very simple: the high and low prices of the last 14 candles draw a range; where is the last close within this range? If the close is at the very top of the range, %R is 0. If it's at the very bottom, it's -100. If it's exactly in the middle, it's -50.
This is almost identical to the %K line you learned in the stochastic lesson; only its scale is inverted and it is not smoothed. Because there is no smoothing, Williams %R reacts very quickly. This speed is an advantage, as it shows reversals early; but it is also a disadvantage, as it is very noisy and often produces false signals.
Above -20 indicates that the price closed near the top of the recent period: buyers are strong. Below -80 is a close near the bottom: sellers are strong. In a strong uptrend, %R can stay above -20 for weeks; this is not a sell signal, but a measure of the trend's strength. For a reversal reading, one looks more at the moment the line exits the extreme zone: an upward move from below -80 can indicate that selling pressure is easing.
Williams %R is more meaningful when used with a trend indicator like RSI or stochastic: extreme zone exits in the direction of the trend are more reliable than those against the trend.
How to read it
- Remember the inverted scale: 0 is the top of the range, -100 is the bottom.
- Read above -20 and below -80 as the extreme zone; in a strong trend, the indicator can stay in the extreme zone for a long time.
- For a reversal, watch for an exit from the extreme zone, not an entry into it.
- Do not use it alone as it is fast and noisy; read it in conjunction with the direction of the trend.
In this state right now
Liquid symbols where Williams %R is currently below -80 on the daily chart (close near the low of the last 14 days).
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Trap
The most common mistake is to buy as soon as %R drops below -80 or sell as soon as it rises above -20. Since the indicator is not smoothed, it frequently goes into extreme zones and stays there for a long time in strong trends. The second trap is confusing the inverted scale: -10 looks 'smaller' than -90, but it is actually closer to the top of the range.
Tip
Among the scans, there is a scan that finds symbols where Williams %R has bottomed out. In the symbol you find, check if the price is near a support level and if the indicator has moved up from below -80.
Glossary
- Williams %R
- An oscillator that shows the position of the last close within the high-low range of the last 14 candles, between 0 and -100.
- Inverted scale
- A scale where 0 is the highest point and -100 is the lowest point.
- Smoothing
- Reducing the noise of an indicator by averaging it; not present in Williams %R.
- Extreme zone exit
- The indicator returning upwards from below -80 or downwards from above -20.
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