Unveiling the PSAR Zigzag Indicator
If you’re familiar with the traditional zigzag indicator, you know it primarily highlights past market swings and often lags behind the action. This lagging nature can make it a bit tricky for traders aiming to spot real-time signals. The traditional zigzag is more of a tool for analyzing historical pivot points rather than a reliable trend-following indicator.
Enter the PSAR Zigzag! This isn't just any zigzag; it's a dynamic, trend-based indicator that offers no lag up to the current price bar. Built on the Parabolic Stop and Reverse (PSAR) trend-following algorithm, this zigzag was designed with the intent to eliminate lag altogether. In the past, we’ve seen zigzags based on PSAR, but they often produced delayed and invalid signals. Why settle for lag when we can have a real-time indicator?
How It Works
The PSAR Zigzag utilizes a backstep feature to ensure the validity of its legs. When identifying a high, it calculates the highest point based on a defined number of lookback bars—similarly for lows. This means that the zigzag can often swing at recent highs or lows, or at significant support and resistance levels. While the PSAR can struggle in ranging markets, this zigzag structure has been fine-tuned for clarity and efficiency.
Latest Versions
- v1: Links swings from candle highs or lows, or the support and resistance identified through the backstep.
- v2: Strictly connects the legs to candle highs and lows at the swing points.
- v3: Introduces forward step logic for ultimate control of the zigzag.
I hope you find this PSAR Zigzag indicator as intriguing as I do. It’s the result of thoughtful experimentation aimed at improving your trading experience. Check it out below!
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