Zig Zag Indicator - Definition

Zig zag indicators are factors that are used to predict when a particular security will reverse its Momentum. This type of indicator can be used to project when a stock offering will level off and begin to drop in value, or when a security currently undergoing a downward Trend will bottom out and begin to regain some of its lost value. Some investors find the utilization of the zig zag indicator approach to be highly effective, while others believe that indicators of this type have limited merit and should not be used as the only Basis for making an investment.

For advocates of the zig zag indicator approach, the methodology appears sound, and is considered a reliable means of projecting future movements in the marketplace. Detractors, while agreeing that a zig zag indicator does Yield some valuable information, say that it can only tell part of the story. With this in mind, some analysts recommend that indicators of this type be used in conjunction with other indicators that address such issues as changes in consumer demand, the outcome of political elections, the potential for natural disasters, and any other factor that could impact the performance of the marketplace in general.

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