ZigZag pivots (swing highs and lows)
The turning points a chart is reduced to before any wave can be counted — each one a high or low that stands out from the sessions either side of it, with the small wiggles filtered away.
A daily chart is a few hundred closing prices, most of which are noise. Before a pattern can be described in terms of legs, that has to be reduced to the handful of points where the direction genuinely changed, and a ZigZag is the standard way of doing it: keep the significant highs and lows, join them with straight lines, discard everything in between. Two choices decide what "significant" means. stocks-llm requires a turn to stand out from the five sessions either side of it — so a high is only a high if nothing higher happened in the surrounding fortnight of trading — and then requires each new leg to reverse at least 5% of the previous extreme, which is large enough that ordinary daily noise cannot manufacture a leg and small enough that a real intermediate swing is not swallowed.
That filter setting is the single most consequential number in this whole family, and it is worth understanding why. Loosening it produces fewer, larger swings and therefore counts at a bigger wave degree; tightening it produces more, smaller ones. The rules a candidate is tested against do not change — they are proportion tests on whatever legs the filter produces — so moving the threshold does not make a count more or less valid, it changes WHICH count you are talking about. This is the honest version of the old complaint that any chart can be labelled several ways: much of that freedom is the freedom to choose this one setting, and stocks-llm makes the choice once, publicly, and uses the same one everywhere rather than picking the setting that makes a given chart look tidy.
The same turning points feed two different readings on this site, which is deliberate. Counted for their shape they give the swing structure — higher highs and higher lows, or lower highs and lower lows — and joined into legs they are what an Elliott candidate is built from. They are read over up to two years of split-adjusted daily closes, they skip bars whose prices are vendor artifacts rather than letting one bad figure set a turn, and a company without enough history for four turns to be observed gets no reading at all rather than one fitted to two. A pivot is a record of a turn that already happened; it is not a signal, and nothing here is advice.
See more terms in the stocks-llm glossary.
Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.