Developed by Larry Williams, Williams % R is a momentum indicator that determines overbought and oversold zones, which oscillates between minus one hundred and zero.

The indicator compares the highest and lowest point within a number of periods. The overbought zone is between minus twenty and zero, which means that the price is close to the highest point of the range. It will be oversold when it lies between minus a hundred and minus eighty, therefore, being close to the lowest point of the range.

We can make use of the overbought and oversold zones to generate buy and sell signals. When the Williams R lies in the oversold zone, it can reverse upwards or have a correction, which produces a buy signal. However, when it is in the overbought zone, it would generate a sell signal.