The Zig Zag indicator is a customizable technical analysis tool designed to filter out minor price fluctuations and highlight significant swing highs and lows on a price chart. It operates by scanning a rolling window of bars (Depth) to identify meaningful pivot points, confirming swings only when price moves exceed a specified minimum Deviation percentage. The Backstep parameter prevents registering pivots of the same type too close together, ensuring clarity.
Visually, the indicator connects these pivots with lines that reveal market trend structure: rising lines indicate higher highs and lows, while falling lines show lower highs and lows. Optional dots mark confirmed pivots, which can serve as reference points for support, resistance, and chart pattern recognition.
Key adjustable settings—Depth, Deviation, and Backstep—allow users to tailor sensitivity for different timeframes, from capturing large swings on higher timeframes to more frequent pivots on shorter-term charts. Line color, thickness, and style are fully customizable.
Traders use the Zig Zag indicator for analyzing trend structure, mapping support and resistance levels, identifying classical chart patterns such as head and shoulders, double tops/bottoms, and anchoring Fibonacci retracements to confirmed swing points. It is applicable to any trading pair and supports visualization and signal outputs for breakout and reversal events based on bar data.