The ZigZag Moving Average indicator builds a moving average using ZigZag reference points.
It has three input parameters:
- ZigZag depth - the Depth parameter of the ZigZag indicator
- ZigZag deviation - the Deviation parameter of the ZigZag indicator
- ZigZag backstep - the Backstep parameter of the ZigZag indicator
The moving average is calculated as a sum of Close prices in the range between the current bar and the reference point, divided by the number of bars in this range.
Calculation example for three bars after the reference point (P):
ZMA[P] = Close[P]
ZMA[P+1] = (Close[P]+Close[P+1]) / 2
ZMA[P+2] = (Close[P]+Close[P+1]+Close[P+2]) / 3
