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ZigZag indicator in Forex
One of the important elements of successful trading is the chart analysis. However, many traders face a problem, sometimes, random price fluctuation distract attention and may result in mistakes. ZigZag indicator provides an unobstructed view of the strong market price swings and helps identify price trends.
A ZigZag pattern in Forex is made of trend lines that connect important extremes in the price chart, which are tops and bottoms. Therefore, this pattern, clearly outlined in the price chart of a trading instrument, indicates important reversal moments of the trend. To see it in the chart, traders use ZigZag indicator as a complementary tool. It is not used for direct price forecasts as it just identifies important trend pivot points, eliminating random price movements within the major trend.
If you have heard about trading strategy based on Elliot waves, you are already familiar with a complementary ZigZag indicator, which allows you to make fewer mistakes in constructing the waves, filtering off random market noises. For example, different traders may draw Elliot waves in the same chart differently. It results from the fact that each trader sees a particular price movement in his/her own way. The ZigZag indicator is applied to even the analysis.
ZigZag indicator is a great technical tool to identify Elliot waves.
ZigZag indicator is available in trading terminal.
Application of ZigZag Indicator, that draws a zigzag pattern in forex, together with other technical tool, like Bollinger bands, for example, is an efficient approach of technical analysis.
The Zig Zag indicator is there to apply consistency to trading signals. This should translate into a more consistent application of other trade strategies. The tool operates, based on a very simple principle. It identifies the most important highs and lows in the chart and connects them with lines, without taking minor price swings into consideration (a similar principle Renko chart is based on). Unlike many other indicators, ZigZag doesn’t predict the future price moves on its own, it just identifies strong price changes in the past. The indicator looks like an angled line, similar to a zigzag (that where the name is from), which is attached to the main chart.
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