Understanding the Zig Zag Indicator
The Zig Zag indicator places a point on the chart when prices are above a pre-selected variable by a percentage. Then straight lines are drawn connecting these points.
The indicator is used to help identify price indonesia whatsapp number data trends. It eliminates random price swings and attempts to show trend reversals. Zig Zag lines only appear when there is a price movementa specified percentage between and down —usually 5%. By filtering out small price changes, the indicator makes it easy to spot trends in all time frames.
The Zig Zag indicator will often need to be optimized according to
Although the Zig Zag indicator does not predict future trends, it can also identify. Potential and head and shoulders tops between planned swings and swings .
Traders can use popular technical indicators such as Relative Strength Index (RSI) and Stochastic Oscillator to confirm whether a security’s price is overbought or oversold when the Zig Zag line changes direction.
Special issues
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A can use the indicator to stay trading until the Zig Zag line is confirmed in the opposite direction. For example, if an investor has they will not sell until the Zig Zag line turns down.
Zig Zag Indicator Formula
How to calculate the Zig Zag indicator
Select the starting point (up or down turn).Select % movement of prices.Determine the next high or low deviation that differs from the starting point =>% price movement.Draw starting from point to point.Determine the next high or low deviation that differs from the new point =>% price movement.Draw a trend line.Repeat until the highest or lowest twist is achieved.
Limitations of the Zig Zag indicator
Other trend-following are based on past price history, which may not predict future price action. For example, most of the trend may occur when a Zig Zag line is formed.
Traders should be aware betting data that the last Zig Zag line may not be stable. When the price changes direction, f the indicator and the price of the security changes direction, the line is removed and replaced by an extended Zig Zag line in the original direction of the trend.
Given the latency, many traders use the Zig Zag indicator to confirm the direction of the trend rather than the perfect entry or exit timing.