Williams R

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Williams %R Analysis – Williams Percent Range | Educational Trading Indicator | TradingSimuLab
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Williams %R (Williams Percent Range)

Momentum oscillator that measures overbought and oversold levels by comparing current closing prices to the highest high and lowest low over a specified period

Technical Overview

The Williams %R is a momentum oscillator developed by Larry Williams that measures overbought and oversold levels by comparing the current closing price to the highest high and lowest low over a specified period (typically 14). The indicator oscillates between 0 and -100, with readings above -20 indicating overbought conditions and readings below -80 suggesting oversold conditions.

Key Insight: Williams %R is essentially an inverted stochastic oscillator, providing similar signals to the Stochastic but with a different scale. The indicator is particularly effective for identifying potential reversal points and momentum shifts in both trending and ranging markets.

How Williams %R Works

What Williams %R Actually Measures

Think of Williams %R as a “price position meter” that answers: “Where is the current price relative to its recent range?”

1
Step 1: Find Price Range

Williams %R looks at the highest high and lowest low over the specified period

2
Step 2: Calculate Position

It determines where the current close is positioned within that range

3
Step 3: Output %R Value

Outputs a value from 0 to -100 showing price position and momentum status

Reading Williams %R Values

%R = -85
Oversold
Price near range bottom, potential reversal signal
%R = -50
Neutral
Price in middle of range, balanced momentum
%R = -15
Overbought
Price near range top, potential reversal signal

Key Williams %R Components

Highest High

The maximum price reached over the specified lookback period, serving as the upper boundary for the price range calculation.

Lowest Low

The minimum price reached over the specified lookback period, serving as the lower boundary for the price range calculation.

Current Close

The most recent closing price that is compared to the established price range to determine its relative position.

%R Line

The final oscillator value ranging from 0 to -100 that indicates overbought, oversold, or neutral market conditions.

Strategy Integration

MCTM
5-Day Predictions

How Williams %R Data Powers Machine Learning:

  • Feature Input: Williams %R values provide momentum signals for the RandomForest model alongside RSI, MACD, and other indicators
  • Overbought/Oversold Detection: Model learns to recognize reversal zones and momentum extremes
  • Divergence Analysis: Williams %R divergences help the model spot early trend changes
  • Breakout Confirmation: Williams %R confirms the strength of price breakouts
  • Noise Filtering: Neutral Williams %R helps the model avoid choppy, directionless markets

Real Impact: Williams %R helps the model time entries and exits based on momentum shifts and reversal signals

MFMM
1-Year Predictions

How Williams %R Enhances Long-Term Forecasting:

  • Cycle Analysis: Model uses Williams %R to identify major market cycles and regime shifts
  • Persistence Modeling: Extended Williams %R extremes help spot long-lasting momentum phases
  • Volatility Context: Williams %R trends help predict periods of high/low momentum volatility
  • Sector Rotation: Model learns when strong Williams %R favors growth vs defensive sectors
  • Macro Confirmation: Williams %R combined with economic indicators improves macro momentum calls

Real Impact: Williams %R helps the long-term model time major allocation changes and sector rotations

Williams %R Level Interpretation

%R < -80 Oversold conditions
▼
Oversold Territory: Williams %R below -80 indicates that the asset may be oversold and due for a potential bounce or reversal. This level suggests that selling pressure has been excessive and the market may be primed for a corrective move upward. However, in strong downtrends, %R can remain oversold for extended periods.
%R -80 to -20 Neutral momentum zone
▼
Neutral Momentum: Williams %R between -80 and -20 represents balanced market conditions with no extreme overbought or oversold readings. This range is typical during sideways markets or when price is moving in a controlled manner. %R in this zone suggests the market is in equilibrium with no strong momentum bias.
%R > -20 Overbought conditions
▼
Overbought Territory: Williams %R above -20 suggests that the asset may be overbought and potentially due for a pullback or reversal. This indicates that buying pressure has been excessive and the market may be overextended. However, in strong uptrends, %R can remain overbought for extended periods.
%R Divergence Price/%R disagreement
▼
Momentum Divergence: When price makes new highs while Williams %R makes lower highs (bearish divergence) or price makes new lows while %R makes higher lows (bullish divergence), it signals potential trend reversal. Divergences are among the most powerful Williams %R signals and often precede significant price movements.
%R Centerline (-50) Momentum equilibrium
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Momentum Equilibrium: Williams %R crossing above or below the -50 level can signal shifts in momentum. Crosses above -50 often indicate bullish momentum, while crosses below -50 suggest bearish momentum. The centerline serves as a dynamic support/resistance level for %R itself.

Why Use Williams %R in Trading?

  • Overbought and oversold condition identification
  • Momentum divergence detection for trend reversal signals
  • Entry and exit timing optimization
  • Risk management through extreme level awareness
  • Confirmation of price breakouts and reversals
  • Market regime identification for strategy selection

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All indicators and strategies are for learning and simulation. No financial advice provided. Market data refreshes on app reload. Past performance does not guarantee future results.