Forex Binary Options Strategy EMA Zig-Zag Stochastic Oscillator

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This is a trading system based on the Moving Average and Zig Zag. But it can also be considered a price action forex system.

The Zig-Zag indicator is a basic tool that analysts use to find out when a security’s trend is reversing.

By determining the support and resistance areas, it helps to identify significant changes in price while filtering out short-term fluctuations, thus eliminating the noise of everyday market conditions.

It is an excellent tool for any trader who follows indicators that use swing highs and swing lows.

The Zig-Zag indicator is an effective tool for analyzing historical data.

It is only based on hindsight and is not predictive in any way.

It is based on the past prices of securities and cannot forecast the next swing highs and swing lows.

Even though the Zig-Zag indicator is not predictive, it is still very useful.

• It is often used in conjunction with applications such as Elliott wave counts.
• Analysts can also use the historical highs and lows to draw lines to identify Fibonacci projections and retracements.
• Chart patterns such as double bottoms, double tops, and head and shoulders can also be determined.

The Zig-Zag indicator is easy to understand and apply. Price changes below a specific threshold, normally 10% or 20%, are removed from trendlines through a filtration process.

Most trading software or online trading platforms have simple input fields that allow you to set the parameters of your own Zig Zag preferences.

Keep in mind that the higher you set the price change threshold, the less sensitive the indicator becomes.

Too low of a spot results in an ineffective Zig Zag; not enough noise is removed. Too restrictive and you may miss profitable price trend data. Most default settings have the threshold between 8% and 15%.

This tool is designed to be complementary and should not be the focal point of a forex trading strategy.

The Zig Zag indicator is there to apply consistency to trading signals.

This should translate into a more consistent application of other trade strategies.

Whatever trading strategy you use, keep in mind that the Zig Zag is a lagging indicator.

It does not predict anything on its own.

 

This Strategy works well on  1H, 4H, Daily, Weekly, and Monthly Timeframe.

The forex market is very fast paced, so you have to complement the Zig-Zag indicator with a system that offers leading signals.

• Zig-Zag
• Moving Average
• Stochastic Oscillator (leading signals indicator)

• Zig Zag (12, 5, 3,) indicator and Zig Zag indicator (8,2,3,) meet together on the same candle;
• Price upward above the 5 EMA and 20 EMA lines
• Stochastic Oscillator (leading signals indicator) crossed and pointing up from the oversold area.

 

• Zig Zag (12, 5, 3,) indicator and Zig Zag indicator (8,2,3,) meet together on the same candle;
• Price downward below the 5 EMA and 20 EMA lines
• Stochastic Oscillator (leading signals indicator) crossed and pointing down from the overbought area.

 

• The ZigZag lines simply react when prices move a certain percentage.
• When using the ZigZag feature, don’t forget to measure the last line to determine if it is temporary or permanent.
  • The last ZigZag line is temporary if the current price change is less than the ZigZag parameter.
  • The last line is permanent when the price change is greater than or equal to the ZigZag parameter.

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