Williams %R is an oscillator that tells you where the current closing price falls relative to the highest high and lowest low over a lookback period (typically 14). It ranges from 0 to -100. A reading near 0 means the price is near the top of its recent range; a reading near -100 means it's near the bottom.

The scale is inverted compared to RSI, which trips people up. A %R of -20 or higher is "overbought" (price near the top of its range), and -80 or lower is "oversold" (price near the bottom). The indicator responds quickly to price changes because it's based purely on the high-low range, not averages, making it more sensitive than RSI to short-term moves.

Williams %R is most useful in ranging markets where price bounces between support and resistance. In those conditions, it reliably flags when the stock has pushed too far in one direction and might snap back. In strong trends, however, it stays pegged at extreme readings for extended periods, generating misleading "overbought" or "oversold" signals that shouldn't be acted on.