ZigZag Indicator: Filtering Price Swings and Its Repainting Limit

The ZigZag indicator draws straight lines between swing highs and swing lows. It does not draw a point for every bar. A new turning point is recorded only when price reverses by at least a set threshold, so smaller moves are left out and the chart shows fewer, larger legs. StockCharts ChartSchool describes ZigZag as a filter for smaller price movements.

The logic runs one leg at a time. While price keeps making new highs, the up leg extends. Once price falls from that high by at least the threshold, the high is confirmed as a turning point and a down leg starts from it. The same logic works in reverse at a low. For the wider background on price moves, read what is trading and the support and resistance guide.

This is an Example with made-up prices, not market data. It uses a 5% threshold and follows seven price points in order. Each move is rounded to two decimal places. A move in the direction of the current leg is measured from the pivot where that leg started. A move against the current leg is measured from that leg's most recent extreme (the highest high in an up leg, the lowest low in a down leg). A reversal confirms that extreme as a turning point only when it reaches 5% of the extreme.

At step 7 the chart shows a provisional leg from 96.00 up to 104.00. Price has fallen to 99.00, but that fall is 4.81%, which is below the threshold. A 5% reversal from 104.00 would need a price at or below 98.80, because 104.00 multiplied by 0.95 is 98.80. Until then, the 104.00 point is not a confirmed swing high, and the last leg can still change.

Had price risen to 106.00 at step 7 instead, the provisional high would have moved to 106.00 and the leg would have been redrawn to that point. A move from 96.00 to 106.00 is 10.42%. The example shows the core limit: the line visible at step 7 can differ from the line visible once a later reversal confirms the swing.

A ZigZag line describes swings that have already been confirmed. It can show where price turned by at least the chosen threshold. It cannot show, when a leg starts, whether that leg will reach the threshold or how far it will go. For that reason this guide does not present the indicator as a timing tool, a signal or a forecast.

A finished chart can look clean and make the turns seem visible as they happened. A useful check is to ask whether the line you see would have been there at the moment you needed it. For the last leg the answer is often no. Use ZigZag to review past structure, such as counting how many swings a threshold produced over a period. Do not rely on it alone to decide an entry, a stop or an exit.

A fractals indicator marks swing points with a fixed bar pattern alone, while ZigZag adds a reversal threshold, so the two tools can mark different turns on the same chart. Both need later bars before the pivot is confirmed. Trendlines join points that you choose by hand, and Elliott wave theory uses swing structure to describe wave patterns, which is a subjective reading.

None of these methods turns a ZigZag line into a forecast. The next step is to compare the fractals rule with the threshold rule on the same chart, and note where they disagree.