Volatility ZigZag

The Volatility ZigZag indicator calculates and plots trend lines based on price movement and market volatility, helping traders identify significant structural pivots while filtering out minor price noise.

Usage

The tool identifies major pivot points in price action and connects them with lines, allowing users to visualize market structure. Unlike standard ZigZag indicators that rely solely on fixed percentage movements, this script incorporates volatility measures (Standard Deviation and True Range) to adapt to changing market conditions.

Key usage features include:

• Trend Identification: Connects swing highs and lows to define the current trend direction.
• Structural Labeling: At each pivot point, the indicator can display critical data such as price change (absolute and percentage), volume profile, and bar counts.
• Confirmation: Fixed pivot points (indicated by ⦿) emerge when price crosses the deviation line, signaling a confirmed reversal.
• Statistical Analysis: An optional table provides data on average wave lengths and the probability of specific wave patterns.

Details

The script utilizes a combination of standard deviation and True Range to calculate a dynamic deviation threshold. By adjusting the "Standard Deviation Factor," users can tune the sensitivity of the pivot detection. A higher "minimum ZigZag candles length" requires more bars to confirm a trend change, which helps suppress false signals in choppy markets.

Settings

ZigZag Calculation

• use High/Low: Determines if the script uses High and Low prices for calculation or an alternative source.
• Else: The alternative price source (e.g., Close) if High/Low is disabled.
• default Length: Automatically sets the lookback period based on the timeframe (e.g., 251 for daily).
• Custom: Allows for a manual lookback period setting.
• minimum ZigZag candles length: The number of bars required to confirm a new pivot.
• minimum ZigZag deviation (%): Sets a floor for the percentage movement required for a reversal.
• Standard Deviation Factor: A multiplier applied to the standard deviation to widen or tighten the reversal zones.

ZigZag Styling

• Draw ZigZag: Toggles the visibility of the ZigZag lines.
• Deviation Line: Displays the threshold line that price must cross to confirm a new pivot.
• Fixed Pivot ⦿: Toggles the ⦿ symbol at confirmed reversal points.
• Alert Point ◯: Displays a symbol when a new pivot is first detected.

ZigZag Labeling

• Draw Labels: Master toggle for all pivot labels.
• Reversal Price: Shows the price at which the pivot occurred.
• Counter: Displays the number of bars between the current and previous pivot.
• Price Change: Shows the absolute price difference and arithmetic mean between pivots.
• Percentage Change: Displays the relative percentage growth and compound growth rate.
• Volume: Shows total and average volume accumulated between pivots.

FAQ

How do I use the Volatility ZigZag for trend confirmation?

A new fixed pivot (⦿) indicates that price has moved significantly enough away from the previous extreme to suggest a structural shift. Traders often look for higher highs/lows or lower highs/lows formed by these lines to confirm trend direction.

What is the difference between the "Fixed Pivot" and "Alert Point"?

The Fixed Pivot (⦿) represents a confirmed structural point, while the Alert Point (◯) signals the exact moment a new pivot emerges based on the deviation logic.

How can I access this script?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.