Williams %R
Identifies Williams %R extremes (< -80 oversold or > -20 overbought) combined with a reversal confirmation candle. Larry Williams developed %R as a momentum oscillator that reacts quickly to price changes. Extreme readings with candle confirmation provide high-probability mean-reversion entries.
What is this scanner?
The Williams %R Reversal scanner identifies extreme momentum readings — the most oversold or overbought states a coin can reach — then waits for a candle-level confirmation of reversal before signaling. Williams %R moves between 0 and -100, where readings below -80 signal oversold and readings above -20 signal overbought.
The key distinction from a basic oscillator screen is the confirmation candle requirement: the scanner does not fire on the extreme reading alone. It waits for a candle that confirms buying (for oversold) or selling pressure (for overbought) — reducing false positives dramatically.
Origin & History
Larry Williams developed the %R oscillator in 1973 and described it in his book 'How I Made One Million Dollars Last Year Trading Commodities.' He went on to win the 1987 World Cup Championship of Futures Trading, turning $10,000 into over $1.1 million in a single year.
Williams %R is essentially the inverse of the Stochastic oscillator, measuring where price closes relative to its high-low range over a set period. Its rapid response to price changes — faster than RSI — makes it well-suited to crypto's volatile 24/7 markets. In perpetuals specifically, %R extreme readings are enhanced by the funding rate mechanism: oversold extremes often coincide with negative funding (shorts paying longs), creating a double incentive for reversal.
Detection Criteria
Williams %R Extreme
The 14-period Williams %R drops below -80 (oversold) or rises above -20 (overbought). The more extreme the reading, the higher the signal grade.
Confirmation Candle
A reversal candle in the opposite direction to the extreme: hammer or bullish engulfing for oversold, shooting star or bearish engulfing for overbought.
Multi-Timeframe Alignment
Williams %R is checked on both the 1h and 4h timeframes. Extreme readings on both timeframes simultaneously produce the strongest signals.
Volume Context
Volume on the reversal candle should exceed the 20-period average, confirming participation rather than an illiquid price bounce.
Grading Breakdown
Williams %R below -90 (or above -10) on both 1h and 4h, with a strong reversal candle on above-average volume. These represent maximum exhaustion.
Extreme %R reading on at least one timeframe with a clear reversal candle. Good probability setup.
Williams %R at -80/-20 threshold with a reversal candle but volume is only average. Valid but not exceptional.
Extreme %R but no reversal candle yet — monitor but do not enter until candle confirmation appears.
Common Mistakes
Entering on the %R extreme reading before the reversal candle forms. Extremes can stay extreme — crypto often trades at -100 for extended periods during crashes.
Using Williams %R alone without a trend filter. Trading oversold signals in a strong downtrend is dangerous — the oscillator can stay in oversold territory indefinitely.
Setting stops too tight. Mean reversion trades often need room to breathe — use the recent swing extreme as the stop, not a tight ATR percentage.
Ignoring the funding rate context. An oversold Williams %R combined with extreme negative funding (shorts crowded) is a much stronger setup than %R alone.
How to Trade
Entry Context
Enter on the close of the reversal confirmation candle — not on the %R extreme itself. For oversold longs, a green candle closing above the prior candle's midpoint is the entry trigger. For overbought shorts, a red close below the prior midpoint.
Risk Management
Stop loss below the candle low (for longs) or above the candle high (for shorts) that triggered the signal. These are natural reversal invalidation points. Position size: 1-2% risk.
Target Framework
First target: the 20-period moving average (typical mean reversion target). Second target: VWAP. For stronger setups (dual-timeframe), consider targeting the prior swing high or 2x ATR from entry.
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QuantScan AI scans 500+ crypto perpetuals in real-time, 24/7. Not financial advice. Past performance does not guarantee future results.