Zig-Zag

The Zig Zag is an indicator that allows for identifying a main trend by filtering out minor variations defined with a parameter. It represents significant trend reversals and allows tracking the evolution of an instrument.

The Zig Zag is calculated based on a minimum offset defined in points or as a percentage. A trend emerges as soon as price progress exceeds the defined minimum variation value.

Example

Interpretation

The Zig Zag clearly indicates the trends of an instrument by ignoring minor movements below the minimum variation. It marks the highs and lows of the trends. This tool can be used in conjunction with Elliott Wave theory because it clearly identifies the different waves of an uptrend or downtrend.
When several peaks of the Zig-Zag curve are at the same price level, this level constitutes a significant support or resistance.