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Hi,
Reg: Zig Zag indicator
Regarding the Zig Zag indicator, the Users manual
says "Reversal Amount. Enter the amount that will cause a reversal.
For example, if you enter "5," a five percent move is required to
cause a bend (i.e., zig or zag) in the Zig Zag indicator".
I had applied the indicator Zig Zag(c,5,%) to a chart. I
found that even when the difference in the price of the stock
between 2 consecutive days is less than 5%, the indicator changes
direction.
Below is the date, closing price of the stock and the
percentage difference between 2 consecutive days. I have also marked
the dates * on which the Zig Zag indicator had changed direction.
Date Closing price % Change
((C-Ref(C,-1))/Ref(C,-1))*100
12.17.2007 389.65 -7.5125
12.18.2007 398.15 +2.1814
12.19.2007 395.65 -0.6279
12.20.2007 389.35 -1.5923
12.24.2007 402.60 * +3.4031
12.26.2007 412.45 +2.4466
12.27.2007 407.30 -1.2486
12.28.2007 423.95 +4.0879
12.31.2007 431.95 +1.8870
1.1.2008 427.75 * -0.9723
1.2.2008 421.80 -1.3910
1.3.2008 423.85 +0.48860
1.4.2008 428.10 +1.0027
1.7.2008 417.95 -2.3709
1.8.2008 405.20 -3.0506
1.9.2008 402.15 -0.7527
1.10.2008 387.20 -3.7175
1.11.2008 388.30 * +0.2841
Can any one please explain why this happens? (This happens to all my
charts)
I would also like to know whether there is a way
(exploration) to find out if the last leg of the Zig Zag indicator
has changed direction.
Thanks in advance,
George
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