How to use ZIG ZAG

Zig zag is one the best indicator to be used because in can determine the lowest and highest price that will be formed by a certain currency pair. This indicator can help you identify the situation of the lowest market and the highest that will be achieved if you apply the usage together with Fibonacci Retracement because you can determine the direction of price easily and clearly at every fibo line. However in this chapter I would like to explain clearly the usage of zigzag indicator, not the usage of Fibonacci Retracement. In the forum also explain the usage of this indicator. The graph below is formed when zigzag application is apllied.

HOW TO USE

Zigzag indicator can help you to make decision when entering position and you can also know the market whether is OVERBOUGHT or OVERSOLD. But you cannot depend only on this indicator without referring to other indicators. Make this indicator as the basic to determine the market highest and lowest only. Never use it as and indicator to determine the main entering position. You must apply the basic technique together with other indicator that will be explained in the next chapter. I will explain how to use this method the best way as shown in the graph below:

Open Sell

In order to open SELL position, you need to refer to the final and highest price touched by zigzag.

- Make sure zigzag line is formed at the highest price before opening SELL position.

- Pay attention by looking at the shape of candlestick bullish formed at highest price zigzag.

- When bullish candlestick is transformed into bearish candlestick, you must open SELL position and make sure the highest price zigzag is formed at a higher point than the previous zigzag or at least the same price. Please refer to the graph.

- Never enter SELL position in the middle of a trend.

- If you already open SELL position you can takeprofit when the currency pair reduces to 50% from the previous bullish trend.

Open Buy

- To open BUY position, you must refer to the final and lowest price touched by zigzag.

- Make sure the zigzag line is formed at the lowest price before opening BUY position.

- Pay attention by looking at the shape of bearish candlestick formed at the lowest price zigzag.

- When the change happen to the shape of bearish candlestick to bullish candlestick, you can open

BUY position and make sure the lowest zigzag price formed lower than the previous zigzag price or the same. Please refer to the graph.

- Never enter BUY position in the middle of a trend.

- When you open BUY position, you can take profit when the currency pair go up to 50% from the previous bullish trend.

Precautions

Zig zag has advantages and disadvantages. In order to avoid problem, I strongly recommend that you never use this indicator alone. You can use it with other indicators explained earlier to make you trading more effective. If you are not fluent with this indicator, you might make a mistake like I’ve shown in the graph. Sometimes we can see that a trend might change by the change of candlestick’s shape but it is actually SIDEWAY as shown in the graph. This is a problem to investors if they use this indicator without referring to other indicators because it has been misread. Therefore I strongly recommend that you combine this indicator with other indicators such as Stochastic, RSI14, RSI3 and MACD. You are advised to use Zigzag at bigger TIMEFRAME such as H1, H4, D1, W1 and MN to avoid problems. Here I listed the advantages and disadvantages and the best technique to maximize the usage of this indicator:

Enter SELL position after the highest price zigzag is formed and make sure there’s a change in bullish candlestick to bearish and make sure he highest price formed is more or equals to the previous highest price.

Enter Buy position after the lowest price zigzag is formed and make sure there’s a change in bearish candlestick to bullish and make sure the lowest price formed is more or equal to the previous lowest price.

Take profit after you feel that SELL or BUY position has reached previous 50% lowest or highest.

Never enter SELL or BUY position in the middle of the market because at this stage there is possibly a sudden change in trend. Never depend on zigzag alone without taking other indicators into account. Make sure you refer to all TIMEFRAME to avoid mistake when entering trend. Begin from bigger TIMEFRAME to smaller. For example MN, W1, D1, H4, H1, M30, M15, M5 & M1.

The best TIMEFRAME are W1, D1, H4 and H1. Lastly be confident with the position that you have entered by being relaxed. Follow and trust the indicators that you are using.