Williams %R

A momentum indicator that measures overbought and oversold levels, moving between 0 and -100.

Williams %R, also known as the Williams Percent Range, is a momentum indicator that fluctuates between 0 and -100. It measures the level of the current closing price relative to the highest high over a specific look-back period, which is traditionally set to 14 days. By showing where a stock is trading relative to its recent range, the indicator helps technical analysts identify potential turning points and trend reversals. Values between 0 and -20 indicate that the asset is trading near the top of its recent range, which is interpreted as overbought. Conversely, values between -80 and -100 indicate that the asset is trading near the bottom of its range, which is interpreted as oversold. Investors monitor these extremes to anticipate when buying or selling momentum might be exhausted. A common pitfall is assuming that an overbought or oversold reading is an immediate signal to trade. During strong, sustained trends, Williams %R can remain at extreme levels for extended periods. Experienced traders often look for the indicator to exit the extreme zone (such as rising back above -80 or falling below -20) or combine it with other technical indicators to confirm a reversal before taking action.

A stock has a 14-day highest high of $50, a 14-day lowest low of $40, and currently closes at $42.62. Its Williams %R is calculated as: (($50 - $42.62) / ($50 - $40)) -100 = ($7.38 / $10) -100 = 0.738 -100 = -73.8. This indicates the stock is trading near the bottom of its recent range, approaching oversold territory.