#DeMARK #Sequential Tutorial 2 - Trend & Reversal (Bear -> Bull)

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
This tutorial is based on the comments made in Jason Perl's book DeMARK Indicators.
I strongly recommend you to read this book if you want more in-depth knowledge.
I publish this tutorial for educational purposes only

TD Countdown - Bullish Case

1. Definition

TD Countdown is the second component of TD Sequential and cannot come into play until a TD Setup formation is complete.
Once the first condition is met, TD Countdown can begin, from the close of bar nine of TD Setup (inclusive), onward.

TD Countdown works in either direction: For the bullish case, the increment occurs when the current close is lower than the low two bars earlier. This price relationship is an important distinction from TD Setup, because the market must be trending for TD Countdown to objectively identify the likely exhaustion point for a trend reversal

In my TD Enhanced Sequential indicator, TD Countdown is represented by circled numbers from 1 to 13. Note these numbers from the countdown phase: 3/4/6/7/9/10 were replaced by a special character.

2. Requirement

# Prerequisite:
As soon as a TD Buy Setup is in place, we can start looking for the first bar of a TD Buy Countdown

# To initiate a TD Buy Countdown
With bar nine of the TD Buy Setup in place, there must be a close less than, or equal to, the low two bars earlier.
Bar nine of a TD Buy Setup can also be bar one of a TD Buy Countdown if it satisfies the previous conditions.

Unlike TD Buy Setup, TD Buy Countdown doesn’t have to be an uninterrupted sequence of qualifying price bars; the TD Buy Countdown process simply stops when markets are trading sideways, and resumes when prices start trending lower again.

# Nested TD Buy Countdown
On bar 9 Setups, an additional step exists to check if a Countdown is already in place.
In case a previous Countdown (A) is detected, a new nested Countdown (B) initiate without ending the (A) Countdown.

You will be able to detect the start of a nested Countdown with a clear graphical signal on 9 Setups:
  • Start of Normal Countdown: 9
  • Start of Nested Countdown:

Color Codes:
  • Green/Red : Perfected BUY/SELL Setup
  • Gray: Unperfected BUY/SELL Setup

# To Complete a TD Buy Countdown
  • The low of TD Buy Countdown bar thirteen must be less than, or equal to, the close of TD Buy Countdown bar eight, and
  • The close of TD Buy Countdown bar thirteen must be less than, or equal to, the low two bars earlier.
When the market fails to meet these conditions, TD Buy Countdown bar thirteen is deferred and a plus sign (+) appears where the number thirteen would otherwise have been.

# TD Buy countdown cancellation
Although a developing TD Buy Countdown doesn’t reset itself if there is an interruption in the sequence of closes each one of which is less than, or equal to, the low two bars earlier, there are a number of built-in conditions, or filters, to help the trader recognize when the dynamics of the market are changing. These filters erase the as-yet-incomplete TD Buy Countdown.
  • If the price action rallies and generates a TD Sell Setup, or
  • If the market trades higher and posts a true low above the true high of the prior TD Buy Setup—that is, TDST resistance.

As we may have now, 2 countdowns in place at the same moment, it is useful to identify which countdown is being cancelled. The "X" character indicates a Countdown cancel.
These colors clarify which countdown is impacted:
  • Green/Red : Main countdown
  • Gray: Nested Countdown

This completes the second tutorial. More to come.
Also check my profile to access more content.

Take care

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