The Zigzag Indicator is a chart overlay that filters out minor price movements to show significant trends and reversals. It connects swing highs and lows based on a user-defined percentage threshold, helping visualise market structure. Though non-predictive, it’s valuable for identifying key swing points, drawing channels, or confirming Elliott Wave patterns. The indicator helps traders avoid noise and focus on primary trend moves. However, since it reacts after swings occur, it’s most effective in hindsight or as a confirmation tool. Combining Zigzag with other indicators like volume or momentum can help anticipate more reliable entry and exit zones.
Example:
A charting tool filters minor price fluctuations to highlight major trend swings.
