ZigZag Confluence

The ZigZag Confluence indicator provides a high-fidelity swing structure analysis by distinguishing between confirmed pivots and developing legs to eliminate silent repainting. It visualizes market geometry through ATR-scaled reversal thresholds while integrating historical excursion statistics (MFE/MAE) to project stop and target rails based on the chart's specific behavior.

Usage

The Usage section describes how the script can be used, including how its non-repainting logic and statistical layers assist in identifying market trends and trade setups.

• Identifying Structure: Use solid lines to identify confirmed swing highs and lows that are frozen and will not move. A sequence of solid higher lows indicates an uptrend, while lower highs indicate a downtrend.
• Monitoring Live Price Action: The dashed "Developing Leg" updates in real-time. Use the "Confirms X" trigger level to see the exact price needed to finalize the current swing.
• Risk Management: When a pivot is confirmed, the script projects horizontal "Stop/Target Rails." These are derived from the 90th percentile of historical adverse heat (MAE) and the median favorable run (MFE).
• Multi-Timeframe Analysis: Observe the MTF ✓-badges on pivot labels. These appear when higher timeframes (automatically derived from your chart) confirm the same structural point, providing evidence-based confluence.
• Assessing Edge: Refer to the "Favorable-Run Distribution" bell curve on the right to see if the current leg is overextended (e.g., in the 85th percentile) or has room to run based on historical samples.

Details

The script is constructed using a scale-free ATR threshold rather than a fixed percentage. This ensures that the sensitivity adjusts naturally to different assets and volatility regimes. Price must reverse from a running extreme by a factor of $k \times ATR(14)$ before a pivot is confirmed.

To address the common "repainting" issue found in standard ZigZag indicators, this tool employs a two-state rendering system:

1. Confirmed Legs: Solid lines drawn between fixed pivots. Once a pivot is "confirmed" (after the reversal threshold and a minimum bar depth are met), it is permanent.
2. Developing Legs: Dashed lines representing the provisional move. This leg may extend or be replaced entirely if price breaks the extreme before confirmation.

The statistical engine tracks outcomes over a fixed window (Horizon) after every confirmed pivot. It records the Maximum Favorable Excursion (MFE), Maximum Adverse Excursion (MAE), and net return. These values populate the Wilson-score-based "Edge Verdict," which determines if the current trend direction has been reliably profitable on the current chart's history.

Settings

Calculation

• ATR Length: The period used to calculate volatility for the reversal threshold.
• Reversal Multiplier (k×ATR): The distance price must move against the current trend to confirm a new pivot.
• Confirmation Depth (bars): The minimum number of bars required after an extreme before it can be frozen as a pivot.

Signals

• Show Developing Leg: Toggles the visibility of the real-time dashed line and its labels.
• Mark Confirmation Bar: Displays a marker on the specific bar where the pivot became actionable, revealing the confirmation lag.
• Show Ghost Pivots: Marks price levels where a standard repainting ZigZag would have placed a pivot that was later erased.
• Market Structure (BOS/CHoCH): Enables labels for Break of Structure and Change of Character based on confirmed levels.

Probability Read

• Excursion Anchor: Choose between "Confirmation" (realistic entry point) or "Pivot extreme" (idealized theoretical entry).
• Excursion Horizon (bars): The look-forward window used to calculate the historical success of pivots.
• Recent Window: The number of recent outcomes used to judge the current "Edge Verdict."

FAQ

How does this differ from the standard TradingView ZigZag? Standard ZigZags redraw their last leg silently, making them look perfect in hindsight but misleading in real-time. This version uses a dashed line for developing moves and solid lines for confirmed ones, ensuring you know exactly what is final.

What do the green and red rails represent? The rails are statistical projections. The favorable rail (leg color) shows where past moves typically reached, while the stop rail (opposite color) is placed at the 90th percentile of historical drawdown (heat) to help define risk.

How do I get access to the ZigZag Confluence? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.