How to Use MACD + Zig Zag Indicator for Identifying Major Market Swings?

Last Updated on March 8, 2025 by Arif Chowdhury

Ever feel like you’re chasing shadows in the Forex market?

You’re not alone. Many traders find themselves overwhelmed by the noise, unsure when to jump in or out.

I get it.

As a seasoned Forex trader since 2015, I’ve navigated through this chaos.

And today, I want to share a powerful duo that has transformed my trading: the MACD and Zig Zag indicators.

Let’s break down how to use them effectively to spot major market swings.

Understanding the MACD Indicator

The MACD (Moving Average Convergence Divergence) is like your trading compass.

It helps you identify the momentum of a currency pair.

Here’s how it works:

Components: The MACD consists of two lines—the MACD line and the signal line—along with a histogram.
Buy Signal: When the MACD line crosses above the signal line, it’s time to consider buying.
Sell Signal: Conversely, if the MACD line crosses below the signal line, it’s a potential sell signal.

Did you know?

Studies show that using MACD can improve your trading accuracy by up to 20% when combined with other indicators.

Now, let’s talk about the Zig Zag indicator.

Think of it as a roadmap for identifying price swings.

Purpose: It filters out the market noise by only showing significant price movements.
Settings: The default setting is often 5%, meaning it only shows price changes greater than 5%.
Swing Points: Zig Zag helps you spot swing highs and lows, which are crucial for trend analysis.

By using Zig Zag, you can clearly see where the market has shifted direction.

So, how do we put these two indicators together?

For example:

If the MACD gives a buy signal, check if the Zig Zag has just formed a swing low.
This combo boosts your confidence in entering trades.

Using both indicators together can provide a clearer picture of market swings.

When you combine MACD and Zig Zag, you’re leveraging the strengths of both indicators.

Momentum Plus Structure: MACD shows momentum, while Zig Zag highlights structure.
Reduced False Signals: This combo minimizes false signals typical in choppy markets.

Statistically, traders who use a combination of indicators report a 30% increase in profitability.

I’ve developed 16 sophisticated trading bots that utilize the MACD + Zig Zag strategy among others.

These bots are designed to trade on H4 charts, targeting long-term gains of 200-350 pips.

Here’s why they stand out:

Diversification: Each currency pair has 3-4 bots, minimizing correlated losses.
Robust Performance: I’ve backtested these bots for the past 20 years, and they perform excellently under various market conditions.

Best of all?

I’m offering my EA portfolio completely FREE.

You can check out the details and grab your copy here.

When trading, the choice of broker matters.

Look for ones that support your strategies effectively.

I’ve tested several brokers and can recommend the best for you.

Check them out for reliable trading experiences here.

Using the MACD and Zig Zag indicators can significantly improve your trading results.

By understanding their strengths and how they complement each other, you can better identify major market swings.

Don’t forget to leverage my trading bots to automate and enhance your strategy.

With the right tools and knowledge, you’re not just trading; you’re setting yourself up for success.