ZigZag
Overview
The ZigZag indicator filters out minor price fluctuations by only plotting lines when price moves by a specified percentage, making macro swing highs and lows visually clear. It is an invaluable tool for wave analysis, Fibonacci retracement placement, and identifying structural patterns in stocks and crypto. Use ZigZag on TradingView as a structural overlay alongside your trending trading strategies.
How It Works
ZigZag draws a line from swing high to swing low only when the price change exceeds a user-defined threshold (typically 5%). The indicator repaints — it will adjust the most recent segment as new price data arrives. It does not predict future moves; it clarifies past structure.
Key Signals
- Higher highs and higher lows on ZigZag confirm an uptrend structure.
- Lower highs and lower lows on ZigZag confirm a downtrend structure.
- ZigZag swing points are ideal anchor points for Fibonacci retracements.
- Use ZigZag to count Elliott Wave structures more accurately.
Common Mistakes
- Using ZigZag for real-time signals — it repaints and should not be used for entries.
- Setting the threshold too low, which defeats the purpose of filtering noise.
- Treating ZigZag as predictive — it is a retrospective structural tool only.
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