Zigzag Cloud: Pivot Averages and Standard Deviation Bands

Summary

The indicator builds a banded chart overlay from Zigzag price pivots rather than calculating its averages directly from every bar. It identifies pivot highs and lows over a configurable lookback, then averages a recent set of pivots to form a central line and separate high-pivot and low-pivot averages. The plotted bands use the standard deviation of those pivots, with a multiplier controlling their distance from the averages; colored fills distinguish the regions between lines.

The overlay is intended to help visualize price relative to its recent swing structure. The document describes the construction and available display settings but provides no trading rules, backtest, or evidence that the bands predict price movements. Zigzag pivots may change as new prices arrive, and the output depends on the selected pivot lookback and averaging length. Treat it as a visualization tool requiring independent evaluation, not as a tested entry or exit system.

Key ideas

• The central line averages a configurable number of recent Zigzag pivots.
• Separate averages of pivot highs and lows create upper and lower reference lines.
• Standard deviation bands expand around the averages according to a user-set multiplier.
• The cloud visualizes price in relation to past swings but comes with no supplied performance evidence.

Tags

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