Williams %R

Williams %R, sometimes referred to as the Williams Percent Range, is a momentum indicator that measures overbought and oversold levels, comparable to a stochastic oscillator. The Williams %R is used to establish entry and exit points in the market.

The oscillator is on a negative scale, from -100 (lowest) up to 0 (highest). Such a scale is a little unusual and is sometimes found altered (by adding 100), but needn’t cause any confusion. A value of -100 is the close today at the lowest low of the past N days, and 0 is a close today at the highest high of the past N days.

%R = (Highest High – Closing Price) / (Highest High – Lowest Low) x -100

Williams used a 10 trading day period and considered values below -80 as oversold and above -20 as overbought. But they were not to be traded directly, instead his rule to buy an oversold was

* %R reaches -100%.
* Five trading days pass since -100% was last reached
* %R rises above -95% or -85%.

or conversely to sell an overbought condition

* %R reaches 0%.
* Five trading days pass since 0% was last reached
* %R falls below -5% or -15%.

It’s rarely works.