Gapless ZLEMA

By eliminating the effect of the overnight gap, the Gapless ZLEMA transitions smoothly between the previous close and the current open. Instead of waiting for the lookback period to eliminate a gap from its calculation, the Gapless ZLEMA can be used immediately because it automatically adjusts to any overnight gap.

gapless zlema

Indicator Description

The Gapless ZLEMA is for charts that show price gaps between yesterday’s close and the current open. Overnight gaps occur with instruments that do not have an overnight trading session. For example, the FDAX for the Germany equity market is closed from 10:00 PM until 8:00 AM local time. Therefore, significant fluctuations in Asian markets may create price gaps that reflect the overnight price action.

Likewise, gaps will appear if you use a session template that only displays the regular trading session. The CME US Index Futures RTH template will only show price data from 8:30 AM to 3:15 PM Central Time. Therefore, a significant price move that occurred overnight, will create a price gap.

This represents a challenge for the traditional ZLEMA because the gap is part of the lookback period. Therefore, at the session start, you’ll have to wait until the gap is eliminated from the lookback period. Only when the gap is no longer part of the calculation, you may use the indicator plots.

Specifically, the calculation used for the Gapless ZLEMA, measures the difference between the prior day close and yesterday’s last indicator plot, transferring it to the current open. In addition to overnight gap adjustment, the indicator also comes with an option to reset the calculation to start at the current open.

Other Library Indicators

Other than the Gapless ZLEMA, the Gapless Indicator category includes: Gapless EMA, Gapless Keltner Channel, Gapless MACD, Gapless SMA, Gapless TEMA and the Gapless WMA. Finally, the general application of Gapless Indicators was discussed in our Indicator Spotlight newsletter.

The Gapless ZLEMA indicator is available for NinjaTrader 8