Indicators  |  AUG 2002

Zigzag Validity by Spyros Raftopoulos

Zigzag Validity by Spyros Raftopoulos Here’s a supplement to the zigzag indicator that will help you determine whether a trend is confirmed. One of the most common tasks a technical analyst engages in is detecting and defining price trends. Among the numerous indicators and techniques that can be used for this purpose is the zigzag indicator. The zigzag filters out moves of minor importance (noise), making the main trend more obvious. Further, the zigzag presents the major moves with great clarity, since it connects peaks and troughs with straight lines that are easy to interpret. You can select the price (open, high, low, or close) you want the zigzag to base its calculations on, and control the indicator’s sensitivity (that is, the minimum amount prices must reverse before the new trend is considered established). Low values make zigzag more sensitive and volatile, whereas high values result in fewer moves that are of greater importance. The sensitivity can be measured either in points or as a percentage.

by Spyros Raftopoulos