MTF ZigZag Indicator
The MTF ZigZag indicator analyzes the activity of Forex market participants and marks the most significant price zones (support and resistance, trend lines).
Description
You probably know that the value of an asset in the Forex market is determined based on a large number of factors.
One of them is the behavior of market participants. Unfortunately, understanding the motivations of bulls and bears is quite hard work.
The free technical analysis indicator Mtf ZigZag will help you solve this problem. We invite you to learn about this in the article.
Contents:
1. Description
2. How to use
1. Description
Mtf Zig Zag is a technical analysis indicator that analyzes price behavior and marks selling and growth waves with lines.
Due to various factors, trading activity on all trading platforms is quite high. In addition, the Forex market uses robots and trading advisors (EAs or EAs for short) that automatically execute trades on all time frames.
Therefore, due to the large volume of transactions on MetaTrader 4 (MT5) charts, chaotic and impulsive fluctuations in currency rates are often observed. They are also called “market noise”, which often interferes with day-to-day operations in the Forex market.
Accordingly, the main task of the Mtf ZigZag indicator is to filter true price movements from false ones, thereby indicating important price zones.
Visually, the indicator looks like a continuous line connecting the most important extreme points.
The indicator builds levels based on the following parameters: ExtDeviation, ExtDepth and ExtBackStep. You can read their description in the Settings section. Now let’s look at examples of how we can use the indicator.
2. How to use
The Mtf ZigZag indicator does not provide entry points as such. However, thanks to the simple and visual display of signals (alerts), the indicator can be useful in the following situations:
- determining support and resistance levels.
Support and resistance levels are technical analysis tools widely used by Forex market participants. Visually, they look like values where waves of sales and rallies have repeatedly occurred.
This chart shows an indicator showing the highest (red) and lowest (blue) values. They act as support and resistance zones.
When using support and resistance levels, you should keep in mind that the more often the price reacts to them, the more gullible they will appear during trading. It is also important to remember about the priority of time frames: signals given on higher time frames are stronger than signals on lower ones.
To simplify the process of determining support and resistance levels, you can download the Support&Resistance indicator.
- when constructing trend lines.
Trend lines are one of the key tools of technical analysis, along with support and resistance zones.
By definition, a trend is a series of higher highs and higher lows (for a bullish trend). The opposite is true for a bearish trend.
Since the indicator automatically marks the highs and lows resulting from sell-offs and rallies, we can manually draw trend lines through them.
In this example, as in the case of support and resistance levels, the extreme points are highlighted in red and blue.
We can see that at a certain point in time new highs are formed, but new lows occur higher and do not repeat. This way, we can manually draw a bullish trend line using higher lows to trade it further.
You can download the AutoTrendLines indicator to automatically draw trend lines.
- when plotting Fibonacci levels on the MT5 chart.
Sell-off and rally waves are necessary to use another technical analysis tool – Fibonacci levels. The usefulness of this tool directly depends on how accurately movements in the Forex market are recognized.
In this example, the Mtf Zig Zag indicator marks a rally wave to which we manually apply Fibonacci extensions. It is quite predictable that the price reversed near one of the levels (value 50%) and the upward trend resumed again.
If you are new to the Forex market or starting to get familiar with Fib levels, the free Fiboretracement indicator will help you learn its details.
To get more information about the market, you can draw multiple ZigZag lines on multiple time frames (short for mtf) at the same time. Thus, if you take into account signals given on different time frames, the performance of the indicator can be improved.