In this article, I will show you a simple technical indicator that will help you to identify support and resistance levels easily trading any financial market.
And what I like about this indicator is that it is absolutely free, and it is available on all popular trading platforms: tradingview, meta trader 4, meta trader 5, etc.
This indicator is called Zig Zag.
After adding the indicator, the price chart will look like that.
First, I recommend changing its settings.
Price deviation - 1.5
Pivot legs - 5
Above are the inputs that I recommend for structure analysis on a daily time frame.
And in style remove labels because they really distract.
What this technical indicator does, it underlines the significant impulse legs. The completion and initial points of the impulses will be the important structures.
Your key structures will be the areas based on the initial/completion points of impulses based on wicks and candle closes.
A key horizontal support will be based on the initial point of the impulse and the lowest candle close.
Key supports will be all the structures that are below current price levels.
A key horizontal resistance will be based on the initial point of the impulse and the highest candle close.
Key resistances will be all the structures that are above current price levels.
Here is how you should properly underline horizontal supports and resistances.
Also, the completion/initial points of the impulses will occasionally compose the vertical structures - the trend lines.
Underline all the supports/resistances based on Zig Zag indicator.
All these structures are significant and can be applied for pullback/breakout trading.
Also, remember that you can modify the inputs of the indicator.
Increase Price deviation and Pivot legs number will show the stronger structures, while decreasing these numbers, more structures will appear on the chart.
On the left chart:
Price deviation - 1.5
Pivot legs - 5
On the right chart:
Price deviation - 5
Pivot legs - 10
The right chart shows just 2 structures, but very important ones.
This indicator is very powerful and it can help you a lot in learning structure analysis.
