Williams %R
Momentum
Larry Williams' mirror image of the stochastic: where does the price close relative to the highest price of the last 14 days? The scale runs from 0 (top) to -100 (bottom).
In its original form this indicator uses volume and/or the daily range (High/Low). The scanner only has closing prices and approximates those inputs (see the note at the bottom). So treat the absolute values as indicative; the direction and the crossings remain usable.
Construction & calculation
- Take the highest and the lowest price of the last 14 bars.
- %R = -100 x (highest - closing price) / (highest - lowest).
- If the price closes at the top of the range, %R equals 0; if it closes at the bottom, %R equals -100.
%R = -100 x (highest(14) - C) / (highest(14) - lowest(14))
Interpretation
- Above -20: overbought. Below -80: oversold.
- Williams himself stressed that reaching an extreme is not a signal — it is the recovery out of it that counts.
- In a strong trend %R stays stuck in the extreme for a long time; that confirms the trend rather than contradicting it.
How the signal works in this scanner
Buy signal (green)%R has dipped below -80 (oversold) within the last 15 bars and is now clearly higher than that trough: the recovery is underway.
Sell signal (red)%R has risen above -20 (overbought) and has since fallen back clearly.
Watch-outs & pitfalls
- Very closely related to the Fast Stochastic; the two often give the same signal. Do not double-count them in your reasoning.
- If both patterns are valid within the window, the scanner takes the most recent extreme as leading.