〽️ Zig Zag

The Zig Zag indicator is a technical analysis tool used to determine support and resistance levels. It connects some points of the chart with straight lines, creating a broken line that continuously changes inclination.

Analysts use it to reduce "noise" in charts, such as momentary breakouts and small retracements against the main trend, making charts more readable.

Although it does not directly generate trading signals, it can be used to identify important support and resistance points, from which signals can be derived when the price crosses a resistance upwards or a support downwards.

The Zig Zag is based on swing highs (highest points of a bullish trend) and swing lows (lowest points of a bearish trend), identifiable in this way:

Swing high: point where the price is higher than both the previous and the following period

Swing low: point where the price is lower than both the previous and the following period