The Zig Zag indicator
attempts to plot only the most significant market turns, and is
used by many traders to try and find the reason why markets turn.
As the last 'leg' in th ezig zag plot can change based on current
market action, it has 'perfect 20-20 vision', and you should be
wary of this.
To calculate the zig
zag indicator, plot only those points on a chart where prices reverse
by a user-specified amount (e.g. 5% or 8%). Then connect these points
with straight lines. The zig zag indicator is virtually useless
in day trading.