What are the zig-zag line in graphs
Answers
The zigzag line in graphs is called Squiggle.
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The Zig Zag indicator plots points on the chart whenever prices reverse by a percentage greater than a pre-chosen variable. Straight lines are then drawn, connecting these points. The indicator is used to help identify price trends. It eliminates random price fluctuations and attempts to show trend changes. Zig Zag lines only appear when there is a price movement between a swing high and a swing low that is greater than a specified percentage; often 5%. By filtering minor price movements, the indicator makes trends easier to spot in all time frames.
KEY TAKEAWAYS
Lowers noise levels, highlighting underlying trends higher and lower.
Works best in strongly trending markets.
The Formula for the Zig Zag Indicator Is:
\begin{aligned} &\text{ZigZag}(\text{HL}, \%change=X, retrace=\text{FALSE},\\ &LastExtreme=\text{TRUE})\\ &\text{If } \%change >=X, \text{plot ZigZag}\\ &\textbf{where:}\\ &\text{HL}=\text{High-Low price series or Closing price series}\\ &\%change=\text{Minimum price movement, in percentage}\\ &Retrace=\text{Is change a retracement of the previous}\\ &\text{move or an absolute change from peak to trough?}\\ &LastExtreme=\text{If the extreme price is the same over}\\ &\text{multiple periods, is the extreme price the first or}\\ &\text{last observation?}\\ \end{aligned}
ZigZag(HL,%change=X,retrace=FALSE,
LastExtreme=TRUE)
If %change>=X,plot ZigZag
where:
HL=High-Low price series or Closing price series
%change=Minimum price movement, in percentage
Retrace=Is change a retracement of the previous
move or an absolute change from peak to trough?
LastExtreme=If the extreme price is the same over
multiple periods, is the extreme price the first or
last observation?
Choose a starting point (swing high or swing low).
Choose % price movement.
Identify next swing high or swing low that differs from the starting point = > % price movement.
Draw trendline from starting point to new point.
Identify next swing high or swing low that differs from the new point = > % price movement.
Draw trendline.
Repeat to most recent swing high or swing low.
TECHNICAL ANALYSIS TECHNICAL ANALYSIS BASIC EDUCATION
Zig Zag Indicator Definition
REVIEWED BY JAMES CHEN Updated Jul 29, 2019
What is the Zig Zag Indicator?
The Zig Zag indicator plots points on the chart whenever prices reverse by a percentage greater than a pre-chosen variable. Straight lines are then drawn, connecting these points. The indicator is used to help identify price trends. It eliminates random price fluctuations and attempts to show trend changes. Zig Zag lines only appear when there is a price movement between a swing high and a swing low that is greater than a specified percentage; often 5%. By filtering minor price movements, the indicator makes trends easier to spot in all time frames.
TradingView.
KEY TAKEAWAYS
Lowers noise levels, highlighting underlying trends higher and lower.
Works best in strongly trending markets.
The Formula for the Zig Zag Indicator Is:
\begin{aligned} &\text{ZigZag}(\text{HL}, \%change=X, retrace=\text{FALSE},\\ &LastExtreme=\text{TRUE})\\ &\text{If } \%change >=X, \text{plot ZigZag}\\ &\textbf{where:}\\ &\text{HL}=\text{High-Low price series or Closing price series}\\ &\%change=\text{Minimum price movement, in percentage}\\ &Retrace=\text{Is change a retracement of the previous}\\ &\text{move or an absolute change from peak to trough?}\\ &LastExtreme=\text{If the extreme price is the same over}\\ &\text{multiple periods, is the extreme price the first or}\\ &\text{last observation?}\\ \end{aligned}
ZigZag(HL,%change=X,retrace=FALSE,
LastExtreme=TRUE)
If %change>=X,plot ZigZag
where:
HL=High-Low price series or Closing price series
%change=Minimum price movement, in percentage
Retrace=Is change a retracement of the previous
move or an absolute change from peak to trough?
LastExtreme=If the extreme price is the same over
multiple periods, is the extreme price the first or
last observation?
How To Calculate the Zig Zag Indicator
Choose a starting point (swing high or swing low).
Choose % price movement.
Identify next swing high or swing low that differs from the starting point = > % price movement.
Draw trendline from starting point to new point.
Identify next swing high or swing low that differs from the new point = > % price movement.
Draw trendline.
Repeat to most recent swing high or swing low.
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