The ZigZag study, a useful graphical tool that connects significant chart points together, draws a line between significant highs and significant lows based on the parameters that you set. In this way, it captures only the most significant changes. It provides an especially clear picture of contracts that move from a high to a low and back.
Peak is usually always correct “afterwards.” If the next low is lower, peak would follow until it makes higher lows than it turns. If it makes a view higher low, it will first turn, but continue to downtrend if lower lows are following.
Peak Strength is used to find possible peaks. It determines the number of highs or lows that must be present before and after a particular price to define it as a peak. When a peak has been found, the ATR Factor is used to determine whether the found peak has had a significant price change using the following conditions:
When the price goes down: If high > swingPrice + ATR_Factor * (TrueRange)
When price goes up: low < swingPrice + ATR_Factor * (TrueRange)
where TrueRange is calculated as MovingAverage(High-Low, 7) and swingPrice contains price when swing has been started or continued.
ZigZag Parameters
|
Parameter |
Description |
|
Display |
Opens sub-window to set parameters •Color = Line color. •Weight = Line thickness. •Display = Line style: line, dash, cross, or plus. •ShareScale = Determines whether sharing of the vertical scales between studies is accepted. Auto = System determine whether sharing is feasible. On = Scale is shared regardless of the functions and studies displayed. Off = Scale is not shared. ShareScale must be On if study is overlaid on a study with multiple outputs. |
|
MarkIt |
Opens Specify Conditions window. |
|
PeakStrength |
Number of highs or lows that must be present before and after a particular price to define it as a peak. |
|
ATR Factor |
Average true range, determines how far the price has to be up or down to be considered a new high or low. |
|
Offset |
Time series offset. This study depends on future information, and so the current bar cannot be accurately included in the calculation. |