Combining Zig-Zag Pivots with Donchian Channels

Summary

The Zig-Zag Donchian indicator combines rolling high and low boundaries with a Zig-Zag process intended to mark directional turns. The channel is calculated from the highest and lowest selected price values over a configurable lookback. When the Zig-Zag crosses a boundary, an oscillator changes direction; the Zig-Zag then updates using the channel width and a bounce-speed multiplier. The document also describes arrows at local Zig-Zag highs and lows as possible sell and buy signals.

A channel fill can use a smoothed color gradient based on where price sits between the boundaries, while settings control the lookback, responsiveness, transparency, gradient, and signal display. The material gives formulas and code-level implementation details, but no backtest or evidence that the signals generate profitable trades. Zig-Zag turning points may also be revised as prices evolve, and the text does not discuss execution, risk controls, or validation across assets and market regimes.

Key ideas

• Donchian boundaries use the highest and lowest selected prices over a configurable number of bars.
• Crossings of the channel boundaries change the direction state used to update the Zig-Zag line.
• The indicator marks local Zig-Zag turning points with possible buy and sell arrows.
• A smoothed gradient shows price position within the channel, and several display and sensitivity settings are configurable.
• The document describes construction but does not report trading performance tests.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.