ZigZag
Type
Other indicator
Short introduction
The ZigZag is neither an oscillator nor a trend follower, but a kind of "filter" that ignores price movements below a defined limit.
Statement
A ZigZag of "x%" only draws changes that are greater than "x%", measured from high to low or analogous from low to high, while smaller changes are ignored. It connects the reversal points with a line. The direction of the line does not change until an upward or downward trend phase corresponding to the set percentage has ended. Predictions, however, do not seem possible.
Formula/calculation
D = ((Ct - E) รท E) * 100
where:
D = Current value (last point) of the ZigZag
E = Last reversal point
The last ZigZag line is therefore down for D < 0 and up for D > 0. However, D is only a new reversal point if prices do not rise (or fall) further in the future, taking into account the fixed limit.
Interpretation
The ZigZag shows the trend of the past and indicates the direction of the current trend phase. Forecasts should not be derived from this "filter", it merely shows the behaviour of a security or an indicator.
Default setting
- Limit: 5%
ZigZag
