What is the Williams %R Indicator?
The Williams %R (Williams Percent Range) Indicator is a momentum oscillator developed by Larry Williams that measures where the current close sits within the recent high-low range on a fixed scale from 0 to -100. It plots in a separate panel below price, with readings near 0 showing closes near the top of the range and readings near -100 showing closes near the bottom. Traders watch -20 as the overbought threshold and -80 as the oversold threshold, with 14 periods as the standard default setting.
How is the Williams %R Indicator Calculated?
The Williams %R is calculated by comparing the latest close to the highest high and lowest low over a lookback window using: %R = [(Highest High − Close) / (Highest High − Lowest Low)] × -100, where Highest High and Lowest Low come from the last N periods and N defaults to 14. The -100 multiplier inverts and scales the result so the oscillator always stays between 0 and -100.
How to Use the Williams %R Indicator in Trading?
To use Williams %R in trading, treat it as a timing tool for momentum shifts at logical chart locations, not as a standalone buy/sell system. The most common signals are:
Oversold exit (long trigger): %R moves below -80, then crosses back above -80, showing sellers stopped closing price near the range lows.
Overbought exit (short trigger): %R moves above -20, then crosses back below -20, showing buyers stopped closing price near the range highs.
Divergence (momentum warning): price makes a new high/low while %R fails to confirm, signaling the push is losing momentum; use price structure (a break of a swing level) for confirmation.
In trends, use a trend filter (for example, only take longs above a rising moving average) because %R can stay pinned above -20 in uptrends or below -80 in downtrends. Place stops beyond the swing high/low that invalidates the setup, not on the oscillator reading.