ZigZag

The ZigZag indicator connects trend reversal points (major highs and lows on the price chart) with line segments.

The minimum price change parameter defines the number of points the price must move in order to form a new "Zig" or "Zag" line. The indicator filters out price fluctuations smaller than the specified value. This it displays only significant movements.

ZigZag is mainly used to simplify chart visualization, as it highlights only the most important price swings and reversals. It is also helpful for identifying Elliott Waves and various chart patterns.

It is important to understand that the last segment of the indicator may change depending on new incoming data.

ZigZag is one of the few indicators where a price change can alter previously plotted values. This ability to adjust past segments based on subsequent price movements makes ZigZag an excellent tool for analyzing historical market behavior. However, it should not be used as the basis for a trading system: it is more suitable for studying past price action than for forecasting.

Parameters

The ZigZag indicator has the following parameters:

• Period – the minimum number of bars on which there cannot be a second high (or low) lower (or higher) than the previous one by the number of pips specified in the Deviation parameter.
• Deviation – the minimum number of pips required to form a new low or high.
• Backstep – the minimum number of bars between highs or lows.

You can also specify the timeframes on which the indicator will be displayed, as well as the line style for upward and downward price movements.