Williams %R (14)

The Williams %R (14) is a momentum oscillators indicator used in Skyrexio Strategy Builder for momentum analysis and overbought/oversold identification.

Introduction

The Williams %R (14) is a neutral momentum oscillator with an inverted scale that measures overbought and oversold conditions. This indicator is essential for precision timing in both trending and ranging markets, oscillating between 0 and -100 with unique inverted thresholds for market extremes.

How Williams %R (14) Works

Williams %R was developed by Larry Williams as a momentum oscillator that measures where the current close is relative to the high-low range over a specified period. The calculation is: %R = (Highest High - Close) / (Highest High - Lowest Low) × -100.

Williams %R characteristics: • Values above -20 indicate overbought conditions (potential selling opportunities) • Values below -80 indicate oversold conditions (potential buying opportunities) • Inverted scale (-100 to 0) makes it unique among oscillators • Fast and sensitive - reacts quickly to price extremes

Market Psychology: Williams %R measures how "high" or "low" the current price is within the recent range. When %R is above -20, it means the close is very near the recent high, suggesting buying pressure may be exhausted. When below -80, the close is near the recent low, indicating selling pressure may be exhausted and a bounce is possible.

Key Characteristics

Attribute	Details
Category	Momentum Oscillators
Type	Neutral Momentum Oscillator (Inverted Scale)
Primary Use	Overbought/oversold identification and reversal timing
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume analysis, price action, support/resistance

Strategy Applications

🟢 LONG STRATEGY (Primary Use)

Use Williams %R for LONG strategies when %R < -80 indicates oversold conditions, especially effective in ranging markets and pullbacks.

Base Entry Order (LONG)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Williams %R (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -80

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (LONG)

Additional Entry 1: Extreme oversold conditions
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -90

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Low Price
Timeframe: 1H

OR

Additional Entry 2: Williams %R bullish momentum
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: -70

AND

First Condition: Williams %R (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -65

Take Profit Orders (LONG)

Rule 1: Exit condition - Overbought conditions reached
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -20

OR

Rule 2: Exit condition - Momentum turning bearish
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: -50

OR

Rule 3: Exit condition - Extreme overbought warning
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -10

Stop Loss Orders (LONG)

Rule 1: Stop loss - Deeper oversold breakdown
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -95

OR

Rule 2: Stop loss - Support level breakdown
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

OR

Rule 3: Stop loss - Volume confirms weakness
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

🔴 SHORT STRATEGY (Primary Use)

Use Williams %R for SHORT strategies when %R > -20 indicates overbought conditions, especially effective in ranging markets and rally fades.

Base Entry Order (SHORT)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Williams %R (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -20

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: Extreme overbought conditions
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -10

AND

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: High Price
Timeframe: 1H

OR

Additional Entry 2: Williams %R bearish momentum
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: -30

AND

First Condition: Williams %R (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -35

Take Profit Orders (SHORT)

Rule 1: Exit condition - Oversold conditions reached
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -80

OR

Rule 2: Exit condition - Momentum turning bullish
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: -50

OR

Rule 3: Exit condition - Extreme oversold bounce risk
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -90

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Deeper overbought extension
First Condition: Williams %R (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -5

OR

Rule 2: Stop loss - Resistance level breakout
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H

OR

Rule 3: Stop loss - Volume surge confirms strength
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe Williams %R

Setup

Timeframe Alignment:

• Daily: Williams %R direction for major bias

• 4H: Williams %R extremes for intermediate signals

• 1H: Williams %R execution with volume confirmation

Execution

Entry: 1H Williams %R extreme + higher timeframe alignment Target: Williams %R opposite extreme or midline Stop: Williams %R failure pattern or support/resistance break

Williams %R Divergence Strategy

Williams %R Divergence Framework:

Bullish Divergence (LONG Setup):

1. Price makes lower lows

2. Williams %R makes higher lows (less oversold)

3. Enter when %R crosses above -70

4. Target %R reaching -20 levels

Bearish Divergence (SHORT Setup):

1. Price makes higher highs

2. Williams %R makes lower highs (less overbought)

3. Enter when %R crosses below -30

4. Target %R reaching -80 levels

Range Trading Strategy:

• Buy Zone: %R < -80 near support levels

• Sell Zone: %R > -20 near resistance levels

• Neutral Zone: %R between -50 and -30 (avoid trading)

Execution Framework:

• Base Order: Williams %R extreme + support/resistance confluence

• Additional: Williams %R momentum confirmation

• Take Profit: Williams %R opposite extreme

• Stop Loss: Williams %R failure or level break

Risk Management Guidelines

Position Sizing Based on Williams %R Levels

Williams %R Level	Position Size	Strategy Type	Risk Level
%R > -10	Reduced (extreme risk)	Contrarian SHORT	High
%R -10 to -20	Standard size	Mean reversion SHORT	Medium
%R -20 to -80	Minimal	Trend following only	Medium
%R -80 to -90	Standard size	Mean reversion LONG	Medium
%R < -90	Reduced (extreme risk)	Contrarian LONG	High

Williams %R Reliability Factors

High Reliability

✅ Extremes with volume confirmation ✅ Support/resistance level confluence ✅ Multi-timeframe alignment ✅ Divergence with price action

Low Reliability

❌ Extremes in strong trends ❌ Single timeframe signals ❌ No volume confirmation ❌ Conflicting market structure

Best Practices

For Mean Reversion Strategies

1. Wait for extremes - %R < -80 for LONG, %R > -20 for SHORT

2. Volume confirmation - Ensure volume supports the reversal

3. Support/resistance - Best results at key price levels

4. Quick profits - Take profits at %R midline (-50) or opposite extreme

For Trend Following Strategies

1. Trend context - Use %R pullbacks in trending markets

2. Avoid fighting trends - Don't short strong uptrends at %R > -20

3. Pullback entries - Use %R < -80 in uptrends, %R > -20 in downtrends

4. Volume validation - Confirm trend continuation with volume

Common Mistakes to Avoid

• Inverted scale confusion - Remember %R uses negative values

• Fighting strong trends - Don't counter-trend at extremes in strong moves

• Ignoring volume - Williams %R without volume confirmation is weak

• No support/resistance - Best signals occur at key price levels

Market Conditions Analysis

Market Type	Williams %R Effectiveness	Recommended Approach
Trending Up	🟡 Medium	Use %R < -80 for pullback entries
Trending Down	🟡 Medium	Use %R > -20 for rally fades
Ranging	🟢 High	Classic overbought/oversold strategy
High Volatility	🟢 High	Williams %R extremes more reliable
Low Volatility	🟡 Medium	Use tighter parameters

Related Indicators

Indicator	Relationship	Link
Stochastic %K	Similar momentum concept	Stochastic %K
RSI	Alternative momentum oscillator	RSI
Stochastic RSI	More sensitive momentum	Stochastic RSI %K
CCI	Cyclical momentum comparison	CCI

Conclusion

Williams %R (14) is a fast and sensitive momentum oscillator that excels at identifying precise reversal points. Its inverted scale and quick response to price extremes make it particularly valuable for timing entries and exits in volatile markets.

Key Takeaways

• PRIMARY USE: Overbought (>-20) and oversold (<-80) identification

• SECONDARY USE: Divergence analysis and reversal timing

• INVERTED SCALE: Remember negative values (-100 to 0)

• ALWAYS: Combine with volume analysis and support/resistance levels

Success with Williams %R requires understanding its inverted scale and fast-moving nature. Use it for precise timing in ranging markets and pullback entries in trends, always confirming with volume and key price levels.

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