Zig Zag - Indicator Formula

The ZIG ZAG indicator is used to filter all those movements that are smaller than a certain amplitude X percentage or X points.

By setting the indicator as a filter at 5%, 3%, 1%, we can see that, in the period considered, all variations below the previous percentage values have been eliminated.

This places the ZIG ZAG on a plane of great chart interest since it is possible to highlight, more or less, both the maximums and the relative and absolute minimums.

It is therefore possible to identify all the chart figures typical of technical analysis, filtering out any variations in movement as desired.

However, all these attributes are limited by the very nature of the indicator because, as it is based on retrospective data analysis, the last point and the line between it and the previous one are not fixed until future prices are known. It is sufficient, therefore, not to consider the last point as definitive and to concentrate solely on the past, which is made more or less evident in its movements by the "filtering" value.

Despite this we can use this indicator for the technical analysis of the figures and the movements in general.

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