The Zigzag & Fibonacci Levels indicator is a powerful tool that combines the identification of market reversal points through the Zigzag and the projection of Fibonacci levels to anticipate possible support and resistance zones.
This article explores in detail how this indicator works, how to configure it, and how it can benefit traders in their technical analysis.
Description of the Zigzag Indicator
The Zigzag indicator is fundamental in technical analysis for identifying trend changes by eliminating market “noise.” This indicator draws lines that connect significant high and low points, filtering minor movements based on a percentage variation or absolute highest or lowest value.
Key Parameters:
- ZZpercent: Defines the method of Zigzag calculation (percentage or value).
- prd: Period for calculating high and low values.
- percent: Percentage change for Zigzag in percentage mode.
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// Inputs ZZpercent=1 prd=15 percent=5 |
Calculation of Pivots High & Low
The indicator identifies high (pivots high) and low (pivots low) points in two ways:
- Percent Mode: Uses percentage variation to determine pivots.
- Value Mode: Uses the highest and lowest values over a specified period (prd).
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if ZZpercent then zz = zigzag[percent](close) ph = zz<zz[1] and zz[1]>zz[2] pl = zz>zz[1] and zz[1]<zz[2] else ph = high=highest[prd](high) pl = low=lowest[prd](low) endif |
Calculation of Direction and Direction Changes
Once the pivots are identified, the indicator determines the current trend direction:
- dir = 1 indicates an uptrend.
- dir = -1 indicates a downtrend.
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if ph and pl=0 then dir=1 elsif pl and ph=0 then dir=-1 else dir=dir endif dirchanged=dir<>dir[1] |
Arrays for Each Pivot
The indicator stores the pivots and their direction in arrays, allowing precise tracking of the Zigzag points:
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if ph or pl then if dirchanged then if dir=1 and not ZZpercent then $zigzag[t+1]=highest[prd](high) $zigzagidx[t+1]=barindex $dir[t+1]=1 t=t+1 elsif dir=-1 and not ZZpercent then $zigzag[t+1]=lowest[prd](low) $zigzagidx[t+1]=barindex $dir[t+1]=-1 t=t+1 elsif dir=1 and ZZpercent then $zigzag[t+1]=zz[1] $zigzagidx[t+1]=barindex[1] $dir[t+1]=1 t=t+1 elsif dir=-1 and ZZpercent then $zigzag[t+1]=zz[1] $zigzagidx[t+1]=barindex[1] $dir[t+1]=-1 t=t+1 endif else if not ZZpercent then if dir=1 and highest[prd](high)> $zigzag[t] then $zigzag[t]=highest[prd](high) $zigzagidx[t]=barindex elsif dir=-1 and lowest[prd](low)< $zigzag[t] then $zigzag[t]=lowest[prd](low) $zigzagidx[t]=barindex endif endif endif endif |
Drawing Zigzag Segments and Fibonacci Levels
The indicator draws the Zigzag segments and calculates the Fibonacci levels based on the trend direction:
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if islastbarupdate then drawsegment($zigzagidx[max(0,t-1)],$zigzag[max(0,t-1)],$zigzagidx[t],$zigzag[t]) if $dir[t]=1 then fib0=$zigzag[max(0,t-1)] fib100=$zigzag[t] diff=fib100-fib0 fib0236=fib100-diff*0.236 fib0382=fib100-diff*0.382 fib0500=fib100-diff*0.500 fib0618=fib100-diff*0.618 fib0786=fib100-diff*0.786 drawsegment($zigzagidx[max(0,t-1)],fib0,barindex+10,fib0)style(line,2)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0236,barindex+10,fib0236)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0382,barindex+10,fib0382)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0500,barindex+10,fib0500)style(dottedline,2)coloured("blue") drawsegment($zigzagidx[max(0,t-1)],fib0618,barindex+10,fib0618)style(dottedline,2)coloured("red") drawsegment($zigzagidx[max(0,t-1)],fib0786,barindex+10,fib0786)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib100,barindex+10,fib100)style(line,2)coloured("grey") drawtext("Fib 0%: #fib0#",barindex+10,fib100+0.05*atr) drawtext("Fib 50%: #fib0500#",barindex+10,fib0500+0.05*atr) drawtext("Fib 100%: #fib100#",barindex+10,fib0+0.05*atr) elsif $dir[t]=-1 then fib0=$zigzag[t] fib100=$zigzag[max(0,t-1)] diff=fib100-fib0 fib0236=fib0+diff*0.236 fib0382=fib0+diff*0.382 fib0500=fib0+diff*0.500 fib0618=fib0+diff*0.618 fib0786=fib0+diff*0.786 drawsegment($zigzagidx[max(0,t-1)],fib0,barindex+10,fib0)style(line,2)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0236,barindex+10,fib0236)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0382,barindex+10,fib0382)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0500,barindex+10,fib0500)style(dottedline,2)coloured("blue") drawsegment($zigzagidx[max(0,t-1)],fib0618,barindex+10,fib0618)style(dottedline,2)coloured("red") drawsegment($zigzagidx[max(0,t-1)],fib0786,barindex+10,fib0786)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib100,barindex+10,fib100)style(line,2)coloured("grey") drawtext("Fib 0%: #fib0#",barindex+10,fib0+0.05*atr) drawtext("Fib 50%: #fib0500#",barindex+10,fib0500+0.05*atr) drawtext("Fib 100%: #fib100#",barindex+10,fib100+0.05*atr) endif endif |
Visualization Configuration
The indicator allows customizing the visualization of past Fibonacci levels and adjusting the colors and styles of the lines for better visual interpretation.
Conclusion
The Zigzag & Fibonacci Levels indicator combines two powerful tools of technical analysis to provide a clear view of key market levels. By using this indicator, traders can more accurately identify reversal points and anticipate possible support and resistance zones.
ZigZag & Fibonacci Levels Code:
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//----------------------------------------------------------------------------// //PRC_ZigZag & Fibonacci levels //version = 0 //26.06.24 //Iván González @ www.prorealcode.com //Sharing ProRealTime knowledge //----------------------------------------------------------------------------// //-----Inputs-----------------------------------------------------------------// ZZpercent=1 //Boolean//Method for pivot points calculation prd=15 //Periods for Donchian Channel and pivot calculation percent=5 //Percentage for zigzag calculation showpastFib=1 //Boolean//shows all zigzag and Fibo levels showDN=1 //Boolean//shows fibo levels in a Uptrend ShowUP=0 //Boolean//shows fibo levels in a Downtrend //----------------------------------------------------------------------------// atr=averagetruerange[14](close) //Only drawing porpouse //----------------------------------------------------------------------------// //-----Pivots High&Low--------------------------------------------------------// if ZZpercent then //-----Mode Percent--------------------------------------------------------// zz = zigzag[percent](close) ph = zz<zz[1] and zz[1]>zz[2] pl = zz>zz[1] and zz[1]<zz[2] //-----Mode Highest/lowest Values------------------------------------------// else ph = high=highest[prd](high) pl = low=lowest[prd](low) endif //----------------------------------------------------------------------------// //-----Direction Calculation--------------------------------------------------// if ph and pl=0 then dir=1 elsif pl and ph=0 then dir=-1 else dir=dir endif dirchanged=dir<>dir[1] //----------------------------------------------------------------------------// //-----Calculate Arrays for each pivot----------------------------------------// if ph or pl then if dirchanged then if dir=1 and not ZZpercent then $zigzag[t+1]=highest[prd](high) $zigzagidx[t+1]=barindex $dir[t+1]=1 t=t+1 elsif dir=-1 and not ZZpercent then $zigzag[t+1]=lowest[prd](low) $zigzagidx[t+1]=barindex $dir[t+1]=-1 t=t+1 elsif dir=1 and ZZpercent then $zigzag[t+1]=zz[1] $zigzagidx[t+1]=barindex[1] $dir[t+1]=1 t=t+1 elsif dir=-1 and ZZpercent then $zigzag[t+1]=zz[1] $zigzagidx[t+1]=barindex[1] $dir[t+1]=-1 t=t+1 endif else if not ZZpercent then if dir=1 and highest[prd](high)> $zigzag[t] then $zigzag[t]=highest[prd](high) $zigzagidx[t]=barindex elsif dir=-1 and lowest[prd](low)< $zigzag[t] then $zigzag[t]=lowest[prd](low) $zigzagidx[t]=barindex endif endif endif endif //----------------------------------------------------------------------------// //-----Drawing conditions-----------------------------------------------------// if islastbarupdate then //-----Last Zig and Fibonacci Levels---------------------------------------// drawsegment($zigzagidx[max(0,t-1)],$zigzag[max(0,t-1)],$zigzagidx[t],$zigzag[t]) if $dir[t]=1 then //-----Calculation when trend Up----------------------------------------// fib0=$zigzag[max(0,t-1)] fib100=$zigzag[t] diff=fib100-fib0 fib0236=fib100-diff*0.236 fib0382=fib100-diff*0.382 fib0500=fib100-diff*0.500 fib0618=fib100-diff*0.618 fib0786=fib100-diff*0.786 drawsegment($zigzagidx[max(0,t-1)],fib0,barindex+10,fib0)style(line,2)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0236,barindex+10,fib0236)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0382,barindex+10,fib0382)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0500,barindex+10,fib0500)style(dottedline,2)coloured("blue") drawsegment($zigzagidx[max(0,t-1)],fib0618,barindex+10,fib0618)style(dottedline,2)coloured("red") drawsegment($zigzagidx[max(0,t-1)],fib0786,barindex+10,fib0786)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib100,barindex+10,fib100)style(line,2)coloured("grey") drawtext("Fib 0%: #fib0#",barindex+10,fib100+0.05*atr) drawtext("Fib 50%: #fib0500#",barindex+10,fib0500+0.05*atr) drawtext("Fib 100%: #fib100#",barindex+10,fib0+0.05*atr) elsif $dir[t]=-1 then //-----Calculation when trend Down--------------------------------------// fib0=$zigzag[t] fib100=$zigzag[max(0,t-1)] diff=fib100-fib0 fib0236=fib0+diff*0.236 fib0382=fib0+diff*0.382 fib0500=fib0+diff*0.500 fib0618=fib0+diff*0.618 fib0786=fib0+diff*0.786 drawsegment($zigzagidx[max(0,t-1)],fib0,barindex+10,fib0)style(line,2)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0236,barindex+10,fib0236)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0382,barindex+10,fib0382)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib0500,barindex+10,fib0500)style(dottedline,2)coloured("blue") drawsegment($zigzagidx[max(0,t-1)],fib0618,barindex+10,fib0618)style(dottedline,2)coloured("red") drawsegment($zigzagidx[max(0,t-1)],fib0786,barindex+10,fib0786)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[max(0,t-1)],fib100,barindex+10,fib100)style(line,2)coloured("grey") drawtext("Fib 0%: #fib0#",barindex+10,fib0+0.05*atr) drawtext("Fib 50%: #fib0500#",barindex+10,fib0500+0.05*atr) drawtext("Fib 100%: #fib100#",barindex+10,fib100+0.05*atr) endif //-----Draw all Fibonacci levels and ZigZag-----------------------------------------// if showpastFib then for i=t-1 downto 1 do //----------------------------------------------------------------------------// drawsegment($zigzagidx[max(0,i-1)],$zigzag[max(0,i-1)],$zigzagidx[i],$zigzag[i]) //-----Show Fibonacci when trend Up-------------------------------------------// if $dir[i]=1 and showDN then fib0=$zigzag[i-1] fib100=$zigzag[i] diff=fib100-fib0 fib0236=fib100-diff*0.236 fib0382=fib100-diff*0.382 fib0500=fib100-diff*0.500 fib0618=fib100-diff*0.618 fib0786=fib100-diff*0.786 drawsegment($zigzagidx[i-1],fib0,$zigzagidx[i+1],fib0)style(line,2)coloured("grey") drawsegment($zigzagidx[i-1],fib0236,$zigzagidx[i+1],fib0236)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[i-1],fib0382,$zigzagidx[i+1],fib0382)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[i-1],fib0500,$zigzagidx[i+1],fib0500)style(dottedline,2)coloured("blue") drawsegment($zigzagidx[i-1],fib0618,$zigzagidx[i+1],fib0618)style(dottedline,2)coloured("red") drawsegment($zigzagidx[i-1],fib0786,$zigzagidx[i+1],fib0786)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[i-1],fib100,$zigzagidx[i+1],fib100)style(line,2)coloured("grey") drawtext("Fib 0%",$zigzagidx[i],fib100+0.05*atr) drawtext("Fib 50%",$zigzagidx[i],fib0500+0.05*atr) drawtext("Fib 100%",$zigzagidx[i],fib0+0.05*atr) //-----Show Fibonacci when trend Down-----------------------------------------// elsif $dir[i]=-1 and ShowUP then fib0=$zigzag[i] fib100=$zigzag[i-1] diff=fib100-fib0 fib0236=fib0+diff*0.236 fib0382=fib0+diff*0.382 fib0500=fib0+diff*0.500 fib0618=fib0+diff*0.618 fib0786=fib0+diff*0.786 drawsegment($zigzagidx[i-1],fib0,$zigzagidx[i+1],fib0)style(line,2)coloured("grey") drawsegment($zigzagidx[i-1],fib0236,$zigzagidx[i+1],fib0236)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[i-1],fib0382,$zigzagidx[i+1],fib0382)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[i-1],fib0500,$zigzagidx[i+1],fib0500)style(dottedline,2)coloured("blue") drawsegment($zigzagidx[i-1],fib0618,$zigzagidx[i+1],fib0618)style(dottedline,2)coloured("red") drawsegment($zigzagidx[i-1],fib0786,$zigzagidx[i+1],fib0786)style(dottedline,1)coloured("grey") drawsegment($zigzagidx[i-1],fib100,$zigzagidx[i+1],fib100)style(line,2)coloured("grey") drawtext("Fib 0%",$zigzagidx[i],fib0+0.05*atr) drawtext("Fib 50%",$zigzagidx[i],fib0500+0.05*atr) drawtext("Fib 100%",$zigzagidx[i],fib100+0.05*atr) endif next endif endif return |
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Ivan can you please explain a line of code that is puzzling me. This is line 37 . As I understand, either the value of dir is updated on line 33 or 35 or it remains unchanged so what can line 37 be used for? Thank you for your explanations and thank you for all the codes that you share here with us. Gabriel