Williams %R — Larry Williams Oscillator
Williams %R is a momentum oscillator bounded between -100 and 0 that measures the close level relative to the window high. Designed by Larry Williams in the 1970s, it has the peculiarity of being inverted compared to the stochastic: 0 = overbought, -100 = oversold. Its unique contribution: superior reactivity to early reversals, at the cost of higher noise.
Definition and formula
The formula is the inverse of stochastic %K, mapped to [-100, 0]:
Standard window: 14 periods
The inverted scale often confuses beginners: the closer the value is to 0, the more overbought the asset; the closer to -100, the more oversold. Mentally, you can add 100 to the value to fall back on the same scale as a stochastic [0, 100].
How to read Williams %R
Classic thresholds
- %R > -20 (between -20 and 0) — overbought zone. The close is in the top 20% of the recent range. Short-term reversal risk, but in a sustained uptrend %R can stay pinned to 0 for weeks.
- %R < -80 (between -80 and -100) — oversold zone. The close is in the bottom 20% of the recent range. Technical rebound likely, especially in confluence with a support or divergence.
- %R between -20 and -80 — neutral zone. No actionable information alone; watch extreme-exit dynamics.
- Oversold exit (%R rises above -80) — early buy signal, faster than RSI or stochastic but noisier.
- Overbought exit (%R drops below -20) — early caution signal.
Difference vs the stochastic
Williams %R and stochastic measure a similar phenomenon but have two key differences:
- No default smoothing: Williams %R is a raw %K, unsmoothed. It reacts faster but emits more false signals than a slow stochastic.
- No second line: there is no %D associated with %R, so no crossover signal. The signal comes solely from entering/exiting extreme zones.
This combination makes Williams %R an early indicator useful in complement to smoothed oscillators, not as a replacement. See the stochastic guide for the direct comparison.
How Cash Scanner uses Williams %R
Williams %R enters the /100 score primarily as an early-timing signal:
- Phoenix mode: %R < -80 climbing back above the threshold boosts the score as a first sign of seller exhaustion, before confirmation by RSI and stochastic.
- Divergences confluence: Williams %R is one of the 4 oscillators scrutinized for the confluence badge (with RSI, MACD, Stochastic). A %R divergence counts as a valid signal.
- Momentum mode: %R near 0 in an ADX > 25 trend confirms strength; it's not a reversal signal as long as ADX doesn't turn over.
Limits and common pitfalls
- Hypersensitivity to noise: without smoothing, %R reacts to every tick. False signals in thin markets are frequent. Cash Scanner never triggers an alert solely on isolated %R.
- Misleading inverted scale: mistaking -20 for "low" is the most common interpretation error. In reality -20 is high (overbought).
- Saturation at 0 or -100: in a very strong trend, %R can stay pinned at an extreme for a long time. Not a reversal signal alone.
- Window 14 vs 10 vs 21: Williams originally recommended 10 periods, more reactive. Cash Scanner uses 14 for consistency with RSI and stochastic.