ZigZag with Fibonacci Levels

The ZigZag with Fibonacci Levels indicator identifies significant price structural pivots to automatically plot ZigZag trendlines and corresponding Fibonacci retracement and extension levels. This tool provides traders with a clear visual representation of market structure and potential support or resistance zones based on historical price swings.

Usage

The Usage section describes how the script can be used to analyze market structure. By identifying swing highs and swing lows over a user-defined period, the script highlights the current trend direction and critical price levels.

• Market Structure Identification: The ZigZag lines connect significant price peaks and troughs, filtering out minor price fluctuations to reveal the underlying trend.
• Dynamic Fibonacci Projections: Once a swing is established, the tool projects Fibonacci levels starting from 0% to 100%. If the price moves beyond the 100% level, the script automatically generates further extension levels (e.g., 1.272, 1.618, etc.) until the price is contained within the plotted range.
• Visual Customization: Users can toggle the visibility of the ZigZag lines or the Fibonacci levels independently. This is useful for traders who only want to see horizontal SR zones without the diagonal trendlines.
• Trend Reversal Alerts: The script includes built-in alerts that trigger when the ZigZag direction changes, signaling a potential shift in market momentum.

Details

The script utilizes a lookback period to determine local price extremes (Highest Highs and Lowest Lows). A direction variable tracks whether the market is currently in an "Up" or "Down" swing.

The Fibonacci logic calculates the difference between previous pivot points. It applies standard ratios (0.236, 0.382, 0.500, 0.618, 0.786) to this range. Unlike static Fibonacci tools, this implementation is adaptive; it continues to draw extension levels incrementally (1.0, 1.272, 1.414, 1.618, etc.) as long as the current price remains outside the initial 0-100% boundary.

Settings

• ZigZag Period: Determines the lookback window for finding pivot highs and lows. Higher values result in broader, more significant swings.
• Show Zig Zag: Toggles the visibility of the diagonal lines connecting the pivots.
• Show Fibonacci Ratios: Toggles the visibility of the horizontal Fibonacci levels and their labels.
• Line Color for Fibo Levels: Sets the color for all plotted Fibonacci lines.
• Zigzag Colors: Allows independent color selection for bullish (Up) and bearish (Down) ZigZag segments.
• Label Location: Controls whether price and ratio labels appear on the "Left" (at the start of the level) or the "Right" (extended into the future).
• Enable Level (0.236 - 0.786): Individual checkboxes to show or hide specific standard Fibonacci retracement ratios.

FAQ

How do I adjust the sensitivity of the trend detection? You can modify the "ZigZag Period" in the settings; increasing this number will make the script ignore smaller price movements and focus on long-term trends.

Why are some Fibonacci levels appearing above the 100% mark? The script is designed to provide price targets. If the current price exceeds the 100% level of the previous swing, it will automatically plot extension levels like 1.272 and 1.618 until the price is reached.

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