Williams %R
Williams %R measures exactly one thing — what floor price is on within its recent range. Take the last 14 bars' high as the top floor and the low as the basement, and mark where price currently sits. The scale running from 0 down to -100 looks odd, but don't let it spook you: think of an elevator running from floor 0 (the high) down to basement level 100 (the low).
A numeric example. Say the last 14 bars' high is $105,000, the low is $100,000, and price is now $101,000. Within that $5,000 range, price sits $4,000 down from the high — so %R is -80, right on the oversold boundary. Equal to the high, %R is 0; equal to the low, -100.
The usual reading: below -80 means price is hugging the recent low, so bounce-hunters watch it; above -20 means price is right under the recent high, watched as a caution flag for short-term overheating. Either way it's a position marker, not a prediction.
Worth knowing: Williams %R is essentially the Stochastic with the same calculation flipped upside down. The moment the Stochastic drops below 20 is the same moment %R drops below -80. So when both point to oversold at once, the evidence hasn't doubled — you've heard the same statement twice.
The biggest trap is trending markets. In a strong downtrend the range itself keeps sliding lower, so %R stays below -80 while the lows keep getting lower. It's not 'we're near basement 100, time to head up' — the whole building is sinking.
What the data actually shows
Barobara counts what actually followed Williams %R signals on the Bitcoin chart and publishes it. The Williams oversold (1h) and Williams overbought (1h) pages show occurrence counts, subsequent win rates, and expected values as they are. Fair warning: the results were not lopsided enough to support 'oversold means bounce' — mostly close to a coin flip. So the accurate way to read this indicator is as a position marker — 'price has reached the floor/ceiling area of its recent range' — not as a forecast of up or down.Common misconceptions
'Below -80 means a bounce is coming' — below -80 is a position marker meaning 'near the recent low,' nothing more. In downtrends the range itself keeps sliding, and it's common for %R to sit in oversold while price falls further.
'Stochastic and Williams %R both oversold makes the evidence twice as strong' — the two compute the same thing from the same inputs with the scale flipped, so they light up together almost every time. That's not added confirmation; it's the same signal seen twice.
FAQ
Q. How is Williams %R different from RSI?
Williams %R measures price's position within the recent high–low range; RSI measures which side — up moves or down moves — carried more force recently. They measure different things and can diverge, but both serve a similar purpose as overbought/oversold gauges.
Q. Why are the numbers negative?
Because Larry Williams, who created the indicator, built the formula around 'how far price has come down from the high.' Drop the sign and flip it to a 0–100 scale like the Stochastic, and the information content is exactly the same.