Pivot highs, fractals and ZigZag

What it is

A pivot high is a bar with N lower highs on each side (a pivot low, N higher lows). Bill Williams' fractal is the same with two bars each side: five bars in all. ZigZag joins swing highs and lows that are at least a set percentage or number of points apart, and is the basis of many automatic harmonic and Elliott tools.

All of them need bars to the right of the swing before they can confirm it, so the mark appears late. ZigZag goes further: its last leg can be redrawn as new bars arrive (it 'repaints'). A backtest that uses these marks at the bar where they're drawn, rather than the bar where they were confirmed, is looking into the future.

How to spot it

• A fractal arrow or pivot label above a high, appearing two or more bars after it.

How to use it

• Use them to mark structure consistently, so your swings don't depend on mood.
• In a backtest, only act on a swing once it has been confirmed.

Common mistakes

• Trading a ZigZag line as if its last leg were final.
• Treating confirmed-later swings as if you'd have known them at the time.

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