The Williams %R is a momentum indicator which compares a stock’s current price to its Highest High and Lowest Low price over a specified period of time (typically 14 days). It is calculated using the following formula:
Williams %R = [(Period Highest High - Current Price) / (Period Highest High - Period Lowest Low)] * -100
The Williams %R values range from 0 to -100. Larry Williams -who first developed the indicator- considered values below -80 as oversold and above -20 as overbought. Williams would buy an oversold stock when the:
%R rises above -95% or -85%
after the %R has already reached -100%
and five trading days pass since the -100% was last reached
Parameters
Overbought - The threshold whereby a stock becomes overbought.
Oversold - The threshold whereby a stock becomes oversold.