Forecasting ZigZag Turning Points with Moving Average Envelopes

Summary

The article proposes an advanced ZigZag indicator that estimates both the evolving current turning point and the level of the next one. It builds separate pools of moving average envelopes for peaks and troughs, using different averaging periods and high or low prices. For each envelope, it measures historical deviations from ZigZag nodes and averages them to position the upper or lower band around the moving average.

At the current bar, the method treats the pooled envelope lines as a surface and examines their cross-section. The cross-section's extremes and center of gravity provide candidate levels for current and predicted ZigZag nodes. The article describes an MQL5 implementation and qualitative chart observations: node estimates often fall within the projected regions, and the shapes of the cross-sections may reflect momentum, trend changes, or support and resistance. These observations are visual rather than rigorous statistical validation. The forecasts can change and should not be treated as confirmed turning points or proven trading signals.

Key ideas

• Separate envelope pools model ZigZag peaks and troughs using different price inputs and averaging periods.
• Historical average deviations from ZigZag nodes determine how each envelope's bands are positioned.
• The pooled envelopes' cross-section supplies extreme and center-of-gravity levels as candidate turning points.
• The article's claims about momentum, trend changes, and support or resistance rely on qualitative observations rather than quantified tests.

Tags

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