Williams %R was developed by American stock and commodity trader and author Larry Williams. The Williams %R which is also known as Williams Percentage Range is a momentum indicator. It helps you determine where the last closing price is relative to the highest and lowest prices of a given time. 

In This Article

What is Williams %R? 

How to analyze the chart using Williams %R? 

How to use Williams %R on Keev? 

Category – Momentum

Type – Leading

Williams %R is a momentum indicator that makes the movement between 0 and -100 and calculates overbought and oversold levels. The Williams %R can be helpful to determine entry and exit points. The indicator is very similar to the Stochastic oscillator and is utilized in the same way. It makes a comparison of stock’s closing price with the high-low range over a specific period  

Formula 

Williams %R = (Highest High – Close)/ (Highest High – Lowest Low) * -100 

Lowest Low = Lowest low of the look-back period 

Highest High = Highest high of the look-back period. 

%R is multiplied by -100 correct the inversion and move the decimal. 

Calculation

Document each period’s high and low over 14 periods. 

Note the current, highest and lowest price on the 14th period and fill in all the variables in the Williams %R formula. 

At the end of the 15th period, note the current, highest and lowest price (for the last 14 periods only) and calculate the new Williams %R value. 

Continue using this formula as each period ends, while utilizing the data of only the last 14 periods. 

 How to analyze the chart using Williams %R? 

Williams %R gives us 3 types of trading signals. They are:- 

• It determines the overbought and oversold zone. 

• It recognizes bullish bearish divergence. 

• It determines failure swings. 

Volume, Chart Patterns and Breakouts can be used to confirm or disprove signals generated by Williams %R. The centreline -50 is an important level to observe. If you know the divergence then you can use the Williams %R for assurance that the price of a stock is likely to continue trending in the current direction or it is likely to reverse in the near future. 

One of the crucial ways while trading with Williams %R indicator is the utilization of Trend lines and Moving Average. A trading strategy can be formulated by using the Moving Average and %R together. Let’s see some key points.  

Chart 1:- https://images.moneycontrol.com/static-mcnews/2019/06/Image4162019.jpg

Buy signal: - Entry -%R below -80. Regular bullish divergences in prices. The buy signal is generated after a cross above -80 from below. Exit. 

One can use various ways to book profit and exit, like %R near -50 or %R near -20. 

Sell Signal:- Entry-%R above -20. Regular bearish divergences in prices. The sell signal is generated after a cross below -20 forms above as indicated exit. 

One can use various ways to book profit and exit, like %R near -50 or %R near -80.