But given the benefits of the zig zag indicator there are some apparent drawbacks. Likewise, when the zig zag indicator plots a low based on the low in price and then you see a retracement, this indicates the potential support level on the chart.įor traders who find it difficult to plot the support and resistance levels, the zig zag indicator is a great tool to learn how to draw the support and resistance levels. This potentially indicates a possible resistance level in the chart.
The indicator or the automatic drawing tool is widely used when it comes to identifying support and resistance levels on the charts.įor example, when price hits a new high on the chart and then retreats, the zig zag indicator plots a high. The first chart below depicts the zig zag indicator using the default settings.Īs you can see from the above chart, the default zig zag indicator simply connects the highs and the lows in price. The MT4 trading platform has a zig zag indicator by default. The zig zag indicator on the other hand, connects the highs and the lows as and when they are formed. The trend lines depict the trend in the price of the instrument being analyzed. The zig zag indicator somewhat different when it comes to trend lines.Ī trend line is basically used to connect two or more corresponding highs or lows in the price. Thus, when you apply the zig zag indicator to the charts, you will see a series of lines that tend to connect the highs and the lows. Depending on the highs and the lows that are formed and the indicator values, the zig zag indicator plots lines from the previous low or high to the next low or high and so on. The zig zag indicator is basically a tool that plots these price variations.
Alerts In Real-Time When Divergences Occur
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