Williams %R

Larry Williams designed it with an inverted scale (-100 to 0) to show 'how far from the high' the close is. 0 means at the high (overbought), -100 means at the low (oversold). It's just a different presentation of the same information as Stochastic.

They're essentially the same calculation with different scales. %R = Stochastic %K - 100. Stochastic 80 = Williams %R -20. Stochastic also has a signal line (%D), while %R is typically used alone.

Williams %R below -80 indicates oversold (close near the lowest low of the range). Remember the inverted scale: -100 is the bottom (most oversold), 0 is the top (most overbought).

The standard is %R(14) with -80/-20 levels. This is what Larry Williams originally used. For faster signals, try %R(10). For smoother signals, try %R(21). Start with 14 and adjust.

Common exits: When %R reaches -50 (mean reversion), when %R reaches -20 (opposite extreme), or when your stop-loss is hit. You can also use a hybrid approach - exit half at -50, trail the rest.

Divergence is when price and %R move opposite directions. Bullish: price makes lower low, %R makes higher low (less negative). Bearish: price makes higher high, %R makes lower high (more negative). Signals potential reversal.

Bullish failure swing: %R drops below -80, rallies above -80, pulls back but stays ABOVE -80, then breaks the prior high. The key is %R staying above -80 on pullback - confirms reversal strength.

Use a 50 or 200 MA. Only take oversold buys when price is above MA (uptrend). Only take overbought sells when price is below MA (downtrend). Or use ADX: trade %R reversals only when ADX < 25.

Yes! Apply a 3-period or 5-period SMA to %R to create a smoothed signal line. Then use crossovers: %R crossing above signal line = buy signal. This makes %R behave more like Stochastic.

Use weekly %R for major bias, daily for entry. Best long: Weekly %R oversold (< -70) + Daily %R crossing above -80. Full alignment = highest conviction.

In bull markets, %R operates -60 to -5 with support at -60 to -50. In bear markets, %R operates -95 to -40 with resistance at -40 to -50. Adjust your oversold/overbought levels based on the major trend.

Compare %R across different periods: short %R(5), medium %R(14), long %R(28). When all three are oversold and turning up, it provides very strong confirmation. Used for high-conviction trades.

%R ROC = Current %R - Previous %R. Positive = %R accelerating up. Negative = %R accelerating down. It provides early warning of %R turns before the main indicator reverses direction.

%R breadth = % of stocks with %R > -50. Above 70% = broad bullish momentum. Below 40% = broad bearish. Use for market timing to identify when many stocks are at extremes simultaneously.

Buy calls when %R crosses above -80 (30-45 DTE, ATM). Sell bull put spreads at oversold %R reversals. Extreme %R often coincides with high IV - good for premium selling strategies.