Product Information

The Zig Zag Wave Forex indicator is a trendline indicator; trendline indicators are the indicators that connect top and bottoms of the trend lines and they are not considered as real indicators but as price chart filters.

The indicator is created by straight lines being drawn between points on a chart where prices have reversed by at least the amount specified.

The Zig Zag indicator connects the significant tops and bottoms of the price (Figure 1). This is useful for filtering out the noise on the price chart, and by setting the Zig Zag minimum price change parameter, the indicator will ignore the prices that less than the minimum price that’s why it works as a noise filter of the price chart.

Formula:
The indicator first calculates the lowest price for the given period and eliminates the prices that less than the minimum price change parameter.

Then it calculates the highest price for the given period and eliminates the prices that less than the minimum price change parameter.

Finally it draws trend line connect the previous top and bottom points

Zig Zag indicator usage:

Although the Zig Zag is not trend following indicator and will not generate buy/sell signals, however there are a lot of usefulness of the Zig Zag indicator:

1- Zig Zag as a filter:

The main usage of the Zig Zag indicator as a filter, as described above setting the minimum price parameter help the Zig Zag to filter the noise of the price chart.

2- Zig Zag as Elliot waves identifier:

The Zig Zag indicator could be use to identify the Elliot waves count, we are going to study Elliot wave in detail in coming articles. You just have to know and remember that the Zig Zag is useful for counting the Elliot waves (Figure 2).

3- Zig Zag as a Retracement measure:

Zig Zag indicator could be used with Fibonacci numbers to indicate the potential retracements of the trend and the direction of this retracement. (we are going to study Fibonacci numbers in another article).

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Price: $249.95 $8.00

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