1) Introduction

The ZigZag indicator is a classic tool to filter out minor price fluctuations and highlight major swing points. The version presented here, ZigZag and SR, goes one step further by combining the swing structure with automatic support and resistance levels, as well as labels for trend classification.

This makes it particularly useful for traders who want a clean, structural view of price action without being distracted by noise.

2) What does “ZigZag and SR” add?

While a standard ZigZag only connects pivot highs and lows, this enhanced version introduces:

• Dynamic support and resistance levels (green/red dotted lines).
• Automatic trend labeling: Higher High (HH), Higher Low (HL), Lower High (LH), Lower Low (LL).
• Customizable visualization: the user can enable or disable the ZigZag lines, support/resistance, and labels.
• ATR-based positioning of labels to avoid overlap with price bars.

These features provide an intuitive chart overlay that helps traders quickly assess trend direction and key zones of interest.

3) How it works (step by step)

a) Pivot detection

The algorithm scans for pivot highs (highest[prd](high)) and pivot lows (lowest[prd](low)) over a user-defined lookback period (prd).

b) Direction of movement

Once a pivot is identified, the indicator determines the direction of the swing:

• Uptrend segment (dir = 1) when a pivot high is confirmed.
• Downtrend segment (dir = -1) when a pivot low is confirmed.

A variable tracks changes of direction (dirchanged) to ensure the ZigZag only updates when a genuine swing reversal occurs.

c) ZigZag construction with arrays

Arrays ($zigzag, $zigzagidx, $dir) are used to store pivot levels, their bar indices, and direction.
When a new pivot is confirmed:

• If the trend has changed, a new segment is added.
• If the trend continues, the last segment is updated to extend to the new extreme.

This ensures the indicator always reflects the most relevant market swings.

d) Dynamic support and resistance

For every confirmed pivot, the indicator projects horizontal dotted lines forward in time:

• Green for support (pivot low).
• Red for resistance (pivot high).

These lines dynamically extend until a new structure point invalidates them.

e) HH, HL, LH, LL classification

Based on the relative position of new pivots compared to previous ones, the code labels swings as:

• HH (Higher High) or HL (Higher Low) in uptrends.
• LH (Lower High) or LL (Lower Low) in downtrends.

To avoid clutter, labels are shifted up or down using ATR(14) as a margin.

f) Efficient rendering with islastbarupdate

To optimize performance, the drawing routines are executed only when the last bar updates, preventing unnecessary redrawing across all candles.

4) Parameters and recommended settings

• prd (default = 15): Defines the sensitivity of pivot detection.
  • Higher values → fewer swings, only major moves.
  • Lower values → more swings, captures smaller fluctuations.
• showSR (default = 1): Enables or disables the support/resistance dotted lines.
• showLabels (default = 1): Toggles the HH/HL/LH/LL labels.
• showZZ (default = 1): Toggles the ZigZag connecting lines.

These options give full flexibility: the user can display only the ZigZag, only support/resistance, or the complete setup.

5) Reading the chart: practical cases

• Trending markets: The sequence of HH-HL or LL-LH clearly shows the dominant direction. Support and resistance levels confirm continuation or possible breakout points.
• Range-bound markets: The ZigZag alternates between highs and lows of similar magnitude, highlighting horizontal zones of equilibrium.
• Breakouts: When a support or resistance dotted line is breached, traders can quickly spot the transition to a new structural phase.

This makes the tool adaptable for both trend-following strategies and mean-reversion setups.

6) Limitations and best practices

• Repainting nature: As with all ZigZag indicators, the latest swing may repaint until a pivot is fully confirmed. This is not a bug but a characteristic of ZigZag logic.
• Choosing prd wisely:
  • Use larger values on higher timeframes to capture meaningful structure.
  • Use smaller values on intraday charts for short-term swing recognition.
• Timeframe sensitivity: The indicator adapts to any timeframe but behaves best when aligned with your trading horizon.

By understanding these nuances, traders can avoid common pitfalls and integrate the tool effectively into their workflow.

7) Code

//------------------------------------//
//PRC_ZigZag and SR
//version = 0
//03.12.2024
//Iván González @ www.prorealcode.com
//Sharing ProRealTime knowledge
//------------------------------------//
// Inputs
//------------------------------------//
prd=15
showSR=1 //Show Support and Resistance//Boolean// 0 means false 1 means True
showLabels=1 //Boolean// 0 means false 1 means True
showZZ=1 //Boolean// 0 means false 1 means True
atr=averagetruerange[14](close)
//------------------------------------//
// Calculate Pivot High and Low
//------------------------------------//
ph = high=highest[prd](high)
pl = low=lowest[prd](low)
//------------------------------------//
// Calculate Direction
//------------------------------------//
if ph and pl=0 then
   dir=1
elsif pl and ph=0 then
   dir=-1
else
   dir=dir
endif
dirchanged=dir<>dir[1]
//------------------------------------//
// Calculate ZizZag levels and x
//------------------------------------//
if ph or pl then
   if dirchanged then
      if dir=1 then
         $zigzag[t+1]=highest[prd](high)
         $zigzagidx[t+1]=barindex
         $dir[t+1]=1
         t=t+1
      elsif dir=-1 then
         $zigzag[t+1]=lowest[prd](low)
         $zigzagidx[t+1]=barindex
         $dir[t+1]=-1
         t=t+1
      endif
   else
      if dir=1 and highest[prd](high)> $zigzag[t] then
         $zigzag[t]=highest[prd](high)
         $zigzagidx[t]=barindex
      elsif dir=-1 and lowest[prd](low)< $zigzag[t] then
         $zigzag[t]=lowest[prd](low)
         $zigzagidx[t]=barindex
      endif
   endif
endif
//------------------------------------//
// Draw ZigZag and Levels
//------------------------------------//
$zigzag[0]=undefined
$zigzagidx[0]=undefined
if islastbarupdate then
   if showZZ then
      //Last ZigZag
      drawsegment($zigzagidx[max(0,t-1)],$zigzag[max(0,t-1)],$zigzagidx[t],$zigzag[t])
   endif
   if showSR and $dir[t]=1 then
      drawsegment($zigzagidx[t],$zigzag[t],barindex,$zigzag[t])style(dottedline,3)coloured("green")
      drawsegment($zigzagidx[max(0,t-1)],$zigzag[max(0,t-1)],barindex,$zigzag[max(0,t-1)])style(dottedline,3)coloured("red")
      if $zigzag[t]<$zigzag[t-2] then
         drawtext("HL",$zigzagidx[t],$zigzag[t]+0.5*atr)coloured("green")
      else
         drawtext("HH",$zigzagidx[t],$zigzag[t]+0.5*atr)coloured("green")
      endif
   elsif showSR and $dir[t]=-1 then
      drawsegment($zigzagidx[t],$zigzag[t],barindex,$zigzag[t])style(dottedline,3)coloured("red")
      drawsegment($zigzagidx[max(0,t-1)],$zigzag[max(0,t-1)],barindex,$zigzag[max(0,t-1)])style(dottedline,3)coloured("green")
      if $zigzag[t]<$zigzag[t-2] then
         drawtext("LL",$zigzagidx[t],$zigzag[t]-0.5*atr)coloured("red")
      else
         drawtext("LH",$zigzagidx[t],$zigzag[t]-0.5*atr)coloured("red")
      endif
   endif
   if showLabels then
      drawpoint($zigzagidx[max(0,t-1)],$zigzag[max(0,t-1)],2)coloured("blue",100)
      drawpoint($zigzagidx[t],$zigzag[t],2)coloured("blue",100)
   endif
   
   //Draw all ZigZag
   for i=t-1 downto 3 do
      if showZZ then
         drawsegment($zigzagidx[max(0,i-1)],$zigzag[max(0,i-1)],$zigzagidx[i],$zigzag[i])
      endif
      if showSR and $dir[i]=1 then
         drawsegment($zigzagidx[i],$zigzag[i],$zigzagidx[i+1],$zigzag[i])style(dottedline,3)coloured("green")
         drawsegment($zigzagidx[max(0,i-1)],$zigzag[max(0,i-1)],$zigzagidx[i],$zigzag[max(0,i-1)])style(dottedline,3)coloured("red")
      elsif showSR and $dir[i]=-1 then
         drawsegment($zigzagidx[i],$zigzag[i],$zigzagidx[i+1],$zigzag[i])style(dottedline,3)coloured("red")
         drawsegment($zigzagidx[max(0,i-1)],$zigzag[max(0,i-1)],$zigzagidx[i],$zigzag[max(0,i-1)])style(dottedline,3)coloured("green")
      endif
      
      if showLabels and $dir[i]=-1 and $zigzag[i]>$zigzag[i-2] then
         drawtext("LH",$zigzagidx[i],$zigzag[i]-0.5*atr)coloured("red")
      elsif showLabels and $dir[i]=-1 and $zigzag[i]<=$zigzag[i-2] then
         drawtext("LL",$zigzagidx[i],$zigzag[i]-0.5*atr)coloured("red")
      elsif showLabels and $dir[i]=1 and $zigzag[i]>$zigzag[i-2] then
         drawtext("HH",$zigzagidx[i],$zigzag[i]+0.5*atr)coloured("green")
      elsif showLabels and $dir[i]=1 and $zigzag[i]<=$zigzag[i-2] then
         drawtext("HL",$zigzagidx[i],$zigzag[i]+0.5*atr)coloured("green")
      endif
   next
endif
//------------------------------------//
return