Williams %R

Williams %R measures where a stock’s closing price falls within its high-low range over a recent period. It is almost identical to the Stochastic Oscillator, but inverted: it runs from 0 to -100 instead of 0 to 100. The default period is 14.

Readings between 0 and -20 are considered overbought — the stock is closing near the top of its recent range. Readings between -80 and -100 are oversold — it is closing near the bottom.

Because the scale is inverted (0 is the top, -100 is the bottom), it can take a moment to get used to. A reading of -5 means the close was very close to the period’s high. A reading of -95 means it was near the low.

Like other oscillators, %R can stay in overbought or oversold territory for extended periods during strong trends. A stock in a powerful uptrend might park itself between 0 and -20 for weeks.

The basic approach is the same as with the Stochastic: look for the stock to move into oversold territory (below -80) and then wait for it to climb back above -80 before entering. This tries to catch the end of a selloff rather than buying into one.

Some traders use %R as a confirmation tool rather than a primary signal. If another indicator suggests buying, they check whether %R is in a supportive position (coming out of oversold territory, for example) before acting.