The zig zag indicator is a simple tool used by analysts to determine when a security's trend is changing. By identifying support and resistance areas, it is possible to identify significant price changes while filtering out short-term fluctuations, thereby eliminating the noise of daily market conditions. It is an excellent tool for any trader who uses swing highs and swing lows as indicators.

The ZigZag indicator is a technical analysis tool used to identify significant price movements and filter out market noise. By connecting high and low points on a price chart with straight lines, it highlights the primary trend direction while ignoring minor fluctuations.

The indicator uses a predetermined percentage (e.g., 5%) to determine the minimum price change required to plot a new line. If price movements are smaller than this threshold, the ZigZag remains unchanged.

Traders use it to spot trends, retracements, and potential reversals. It also helps identify chart patterns like double tops, bottoms, and Elliott Wave formations. While useful for visualizing trends, the ZigZag indicator is reactive, not predictive, and should be combined with other tools for better analysis.