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Tom DeMark describes this trading tool as looking for at least nine consecutive closes less than the close four trading bars earlier for a buy setup and at least nine consecutive closes greater than the close four trading bars earlier for a sell setup. This establishes a context that helps a trader determine whether they should be buying or selling the market. This tool is designed to anticipate a trend reversal.
The indicator counts the bars in the sell setup and labels the count in blue above the high of the bar. The down counts in the buy setup are shown in red below the low of the bar. Ensign's Design Your Own™ study was used to construct the indicator.
This DYO property form implements the Up count. Line A reads the Bar Close values so that Line B can calculate a 4 bar Momentum of the closes. This Momentum is stored in Global Variable [4]. Line C tests the Momentum to be above zero, and when this is True, Line D increments the Up counter in GV[250] and shows this count as a marker in Blue in the Color Band Position of Above High 2. Line E tests for when Momentum is not above zero, and conditionally resets the counter in GV[250] to zero via Line F. The down count in Red is implemented using the following DYO. The primary reason a second DYO is used is so the Color Band Position for the marker can be the Below Low 2 selection.
The Momentum from the first DYO is still available in GV[4], and thus does not need to be recalculated. Line A tests for the Momentum to be below zero, and conditionally increments the down counter in GV[251]. When Momentum is not below zero, Line C and Line D reset the counter in GV[251] to zero. This example is available as the DemarkCount template and can be downloaded from the Ensign web site using the Internet Services form. Click this link to learn more about the TD Sequential Indicator. Last modified 8/8/08 1:22 PM |
