Extra indicators
ZigZag
Connects significant highs and lows with straight lines, hiding the small wiggles in between.
The idea in plain words
Charts are noisy. ZigZag only draws a new line when the price has reversed by more than a set percentage, so you see the main swings clearly. It is a tool for reading structure (higher highs, lower lows), not a signal.
How it is calculated
It follows the price until it turns back by the deviation (for example 0.3%), at least "depth" candles after the previous turning point; then it marks the extreme and starts a new leg.
New swing when the price turns back from the running extreme by ≥ deviation %
and at least depth candles after the previous swing
The last leg moves with the price until it is confirmedHow to use it
- Spot trend structure: rising swing highs and lows mean an uptrend.
- Draw Fibonacci and Elliott wave counts from the ZigZag points.
Drawing conclusions
- The last line can still change as new prices arrive (it "repaints"): never treat it as a fixed signal.
Example
With a 0.5% deviation on EURUSD H1, ZigZag shows four clear swings in a week where the candles show dozens of small ups and downs.
Prices in examples are illustrative.
Watch out for
- Because the last leg repaints, back-tests that use ZigZag points can look far better than reality.
A little history
A classic chart tool included in most trading platforms.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.