The Zigzag Arrow Indicator plots real-time trend-reversal signals and helps to spot the key swinging points of the price. It closely monitors the diversity of the price movements and delivers instant signals whenever it detects a valid reversal condition of the market trend.
Identifying the market highs and lows is an integral part of daily technical analysis. Because technical traders aim to sell from the top and buy from the bottom to ensure a higher probability of success. In that regard, this zigzag indicator plays a key role to find the appropriate levels for executing trade entries.
The Zigzag indicator only plots arrow signals to show the possible diversity in price movements. It plots red arrows above the price to signal a bearish reversal condition of the trend. On the other hand, a blue arrow below the candle signals a bullish reversal.
Most importantly, these arrows don’t represent a direct buy-sell signal. They only highlight potential price swinging areas and indicate the possible direction of upcoming trends.
The zigzag arrow signals are much more effective during a trend-following price move rather than a sidelined market. So it requires to involve other technical factors like candlestick patterns and price level analysis for anticipating a valid trade setup.
For instance, the indicator plots a blue arrow below the candle after the price makes a huge bearish move. This means the price has reached an oversold condition and trying to revive its bullish strength. In such a condition we’ll look forward to a bullish reversal candlestick pattern such as a bullish pin bar or an inside bar break to confirm a buy order.
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- A blue arrow appears below the price candle’s low
- The price plots a bullish candlestick pattern
- Hold the buy orders until the indicator plots a red arrow
- The indicator plots a blue arrow above the candle’s high
- A bearish candlestick pattern is formed at the same time
- Exit short whenever the indicator shows a red arrow signal