What does William %R measure in technical analysis?

William %R is a momentum indicator that measures the level of the current price relative to the high and low prices over a specific time frame, typically 14 days. Specifically, it calculates the closing price relative to the highest high and the lowest low during that period, and then expresses that as a percentage.

The measure helps traders identify overbought or oversold conditions in a security, providing insights into potential price reversals. A reading near -100 indicates that the security is potentially oversold, while a reading near 0 suggests it may be overbought. The reference to comparing the current price to a past period, such as the last 10 days, aligns with how William %R operates, highlighting its function in identifying momentum shifts based on past price levels.

In summary, William %R effectively captures market momentum within a defined timeframe, reflecting the relationship between a security's price movement and the highest and lowest prices over that selected duration.