DeMark, FOREX, PRICE

DeMark StudiesUser’s Guide

Aspen Research Group, Ltd.710 Cooper Avenue, Suite 300Glenwood Springs, Colorado 81601

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Copyrights© Copyright 2001, Aspen Research Group, Ltd.

ALL RIGHTS RESERVED.

Trademarks held by Thomas R. DeMark:D-Wave™Daily Range Projections™DeMarker Indicator™Countdown™Intersection™Setup™Range Expansion Index™ (REI)Sequential™TD Breakout Qualifiers™TD Demand Line™TD Dollar Rated Option Ratio™TD Line Breakout™TD Line Value™TD Lines™TD New High-New Low Index™TD Points™TD Price Points™TD Price Projector™TD Retracement Arc™TD Retracement Qualilfier™TD Supply Line™TD Supply Points™Trend Factors™

Information in this document is subject to change without notice. No part of thisdocument may be reproduced or transmitted in any form or by any means, electronicor mechanical, for any purpose, without the express written permission of AspenResearch Group, Ltd.

Print Date: 11/12/01 4:17 PM

Conventions The Add Study Toggle

DeMark Studies User’s Guide ii

Library of Congress Cataloging in PublicationData For Tom DeMark’s Book

DeMark, Thomas R., 1947-The new science of technical analysis / Thomas R. DeMark.

p. cm. - (Wiley finance editions)ISBN 0-471-03548-3 (acid-free paper)1. Investment analysis. 2. Stock price forecasting. 3. Financial

instruments-Prices-Forecasting. I. Title. II. Series.HG4529.D46 1994332.6-dc20

Printed in the United States of America

Table of Contents

DeMark Studies User’s Guide i

Table of ContentsTABLE OF CONTENTS............................................................................................... I

PREFACE ...............................................................................................................IV

Conventions ..............................................................................................................................................iv

DEMARK STUDIES .................................................................................................. 1

The Select DeMark Study Menu..............................................................................................................1The Add Study Toggle ............................................................................................................................1Done Selection ........................................................................................................................................2

The Trend Line Functions Menu .............................................................................................................2The TD Options Selection .......................................................................................................................3

TRENDLINES........................................................................................................... 4

TD Lines™.................................................................................................................................................4Qualifying TD Lines™............................................................................................................................6TD Lines™ Parameters ...........................................................................................................................8

Trend Factors™ ......................................................................................................................................16Trend Factors™ Parameters ..................................................................................................................19

RETRACEMENTS ................................................................................................... 20

TD Retracement Arc™...........................................................................................................................20TD Retracement Arc™ Parameters .......................................................................................................21

Relative Retracement ..............................................................................................................................22Qualifying Relative Retracement ..........................................................................................................24Relative Retracement Parameters..........................................................................................................25Lines Parameters in Relative Retracement ............................................................................................26

Table of Contents

DeMark Studies User’s Guide ii

Absolute Retracement.............................................................................................................................26Absolute Retracement Parameters.........................................................................................................29Lines Parameters in Absolute Retracement...........................................................................................29

OVERBOUGHT/OVERSOLD ..................................................................................... 30

Range Expansion Index™ ......................................................................................................................30Range Expansion Index Parameters ......................................................................................................32

Range Expansion Breakout ....................................................................................................................35Range Expansion BreakOut Parameters................................................................................................37

DeMarker Indicator™............................................................................................................................42DeMarker Indicator™ Parameters.........................................................................................................45

D-WAVE™........................................................................................................... 47

D-Wave™ Parameters ............................................................................................................................50

MOVING AVERAGES .............................................................................................. 56

TDMA I ....................................................................................................................................................56TDMA I Parameters ..............................................................................................................................58

TDMA II ..................................................................................................................................................60TDMA II Parameters.............................................................................................................................60

TD Channel I ...........................................................................................................................................61TD Channel I Parameters ......................................................................................................................64

TD Channel II..........................................................................................................................................65TD Channel II Parameters .....................................................................................................................68

TD Channel III ........................................................................................................................................69TD Channel III Parameters....................................................................................................................72

SEQUENTIAL™ ..................................................................................................... 74

Sequential Parameters ............................................................................................................................75

Table of Contents

DeMark Studies User’s Guide iii

Setup™ Parameters ................................................................................................................................77Cancel Cond Parameter .........................................................................................................................79

Intersection™ Parameters......................................................................................................................80

Countdown™ Parameters ......................................................................................................................82

Recycle Parameters .................................................................................................................................85

Qualifying Sequential..............................................................................................................................86

TD GAP............................................................................................................... 90

TD Gap Parameters ................................................................................................................................91

DAILY RANGE PROJECTIONS™.............................................................................. 94

Daily Range Projections™ Parameters .................................................................................................94

RATE OF CHANGE STUDIES ................................................................................... 97

Rate of Change ........................................................................................................................................97Rate of Change Parameters ...................................................................................................................99

TD Pressure Index.................................................................................................................................101TD Pressure Parameters ......................................................................................................................102

TD Pressure Ratio .................................................................................................................................104TD Pressure Ratio Parameters.............................................................................................................107TD Pressure Change............................................................................................................................108TD Pressure Change Parameters .........................................................................................................110

WALDO PATTERNS ............................................................................................. 111

INDEX................................................................................................................. 112

Preface

DeMark Studies User’s Guide iv

PrefaceThis publication includes information on using DeMark studies on Aspen Systemssoftware. Using Aspen Systems software may have significant financialimplications. Before using this software or adapting it to your business, you shouldconsult with a market expert.

In this guide, the nouns “Aspen Systems,” “Aspen Graphics,” and “Aspen” refer tothe software published by Aspen Research Group, Ltd. for Bonneville InformationSystems, S & P Comstock, Knight Ridder, CMA, and Signal data feeds, whichsoftware runs on standalone computers and networked computers.

Companion information is available in the following publications:

• Aspen Options Users Guide• Aspen Systems Reference Guide• Aspen Systems Users Guide• Basic Options Page Guide• Basic Options Users Guide• MESA Users Guide• PLATT’S User Guide• Price Volume Users Guide

For Microsoft Windows users, windows help modules are currently available for:

• Aspen Options• Aspen Systems• Basic Options• CBOT Market Profile• DeMark Studies• MESA Studies• PLATT’S

ConventionsUnless otherwise noted, this guide employs the following conventions:

Convention Meaningb Keycaps indicate keystrokes.

q + ` Keycaps separated by a plus sign (+) indicate multiple

Preface

DeMark Studies User’s Guide v

keystrokes.

Retrieve Page Italics indicate menu selections.

Main MenuSizing a Window

Initial caps indicate menu titles and cross references.

Preface

DeMark Studies User’s Guide vi

Notes

DeMark Studies

DeMark Studies User’s Guide 1

DeMark StudiesDeMark studies consist of several studies and trend lines. These studies are availableby subscription. Once you subscribe, you will receive a password that enables yoursystem to display DeMark studies. For information on subscribing, please contactyour sales representative.

The Select DeMark Study MenuMost DeMark studies are available through the Select Study menu (DeMark studiesthat are retracements are available in Aspen’s trendline feature; see, Retracements,page 18). When you subscribe to DeMark studies, the DeMark Studies... selectionon the Select Study menu is made accessible. Selecting DeMark Studies... displaysthe Select DeMark Study menu.

Like other study menus, the Select DeMark Study menu makes a distinction betweenoverlays and conventional studies. Overlays automatically get displayed on top ofinformation in the active chart windows while conventional studies replace theinformation in the active chart window unless you activate the Add a Study toggle.

The Add Study ToggleAn asterisk appears between the parentheses when add mode is on. Clicking on thistoggle turns add mode on and off. Set to on, the study you select is displayed on topof the data in the chart. Set to off, the selected study replaces the data in the chart.

DeMark Studies The Trend Line Functions Menu


The Add Study toggle enables you to display two or more studies in a chart window,or in a split window. You can also use the Add Study toggle to make a conventionalstudy behave like an overlay study—that is, to display on top of the information inthe active chart window.

When you are in replace mode, selecting a study replaces the content of a chart orsplit chart window with the study you select. Overlays are not affected by replacemode (overlays are always displayed “on top of” bar or formula data).

Done SelectionCauses the Select Study menu to disappear, and returns you to the active chartwindow.

The Trend Line Functions MenuSeveral DeMark studies are available through Aspen’s trendline feature. (For moreinformation on trend lines, please read chapter 7, Trend Lines, in your AspenGraphics Users Guide.) These DeMark studies are retracements: TD RelativeRetracement, TD Absolute Retracement, TD Factor (Trend Factors™), and TD Arc.

The DeMark Subscription changes the appearance of the Trend Line Functionsmenu. The retracement studies available through Aspen’s trendline feature appear atthe bottom of the Draw Functions section of the menu, as shown in the figure below:

At the bottom of the Trend Options section of the menu, the TD Options selectionmakes a parameters menu for the DeMark Retracements accessible. This parametersmenu is the DeMark Trendlines menu.

DeMark Studies The Trend Line Functions Menu


The TD Options SelectionThe DeMark Trendlines menu contains four columns, one column for each DeMarkstudy available through Aspen’s trendline feature.

Price Parameters, DeMark Trendlines MenuThe defaults for the price parameters are Low and High. These parameters specifythe operative price or price comparison of the reference bar. Other options includeOpen, High, Low, Close, Mid-Point, and Average.

Ratio Lines Parameters, Trend FactorsBy default, some ratios are set to On while others are set to Off. Ratios set to On aredrawn. Changing a ratio to Off suppresses it.

Trendlines TD Lines™


TrendlinesDeMark trendline studies attempt to eliminate arbitrary creation, application, andinterpretation of trend lines by applying point selection criteria consistently. Despitetheir names and treatment in DeMark’s book , The New Science of TechnicalAnalysis, Aspen treats DeMark trendline studies as overlays. These studies createconsistency by defining point selection criteria and then applying these criteria to adata set.

Studies:

TD LinesTrend Factors

TD Lines™TD Lines are mechanically and objectively constructed. The trendlines drawn areTD Supply Lines and TD Demand Lines. Once the TD Lines are broken andqualified, the study automatically calculates a price projection. A qualified breakoutappears as a solid line; whereas, a disqualified breakout is a dashed line.



TD Lines are drawn by connecting TD Points. A level one TD Point high is formedonce a high is immediately preceded and succeeded by bars with lower highs. Thus,a level one high requires only three bars to make this determination. TD Point highsvary in “magnitude” based on the number of immediately preceding and succeedingbars that have lower highs. For example, level two has two bars preceding, two barssucceeding, and so on through level nine.

The converse of these principals governs TD Point lows.

The study command for TD Line is .TDLINE.

For further information on TD Line, please refer to Thomas S. DeMark, The NewScience of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 1,Trendlines.

Qualifying TD Lines™By first qualifying a TD Line, the user reduces the risk that intra-day entry (goingwith the TD Line Breakout) will fail, and, at the same time, increases the chance of



success should the user fade the disqualified trade (going against the TD LineBreakout). To be a Qualified TD Line, price must satisfy one of the followingconditions:

1. The close of the bar prior to upside/downside penetration isdown/up versus the close two bars ago, OR

2. The open of the breakout bar exceeds upside/downside the TD Lineand also opens above/below the previous bar’s close, OR

3. The difference between the previous bar’s close and its truelow/high added to/subtracted from the previous bar’s close is lessthan/greater than the TD Line. A true high is that bar’s high or theclose of the previous bar, whichever is greater; a true low is thatbar’s low or the close of the previous bar, whichever is less.

To be a Disqualified TD Line (dashed line), NONE of the above conditions exist,and the reverse logic applies.

Please note that you can customize qualifiers using the Parameter menu.

Disqualifying TD Lines™To be a disqualified TD Line, use the reverse logic of the above conditions.



TD Lines™ Parameters

A TD Point high of level K is a high which is strictly grater than the highs of the Kpreceding and K following bars. Similarly, a TD Point low of level K is strictly lessthan the lows of the K preceding and K following bars. (Gaps are not counted inmaking this determination.) Note that the level number of a recent high or low maynot be finally determinable until more bars are obtained; a high or low N bars backfrom the present cannot now be labeled as having a level more than N, but it maylater be given a higher number. Similarly, the level of a bar near the start of theavailable data may be uncertain. Either chart or “true” highs and lows can be used todetermine TD Points; the latter effectively means that a high or low is a level K TDPoint only if it is greater than or less than the close of the K+1’st prior bar. (A strictapplication of the definition of true high/low would mean that a bar that closes at itshigh/low cannot be a TD Point because the next bar’s true high or low is at leastequal to that close.)

The TD Lines study identifies TD Points by drawing the level number above orbelow the high or low of the bar. This display can be suppressed.

A TD Lines trendline is drawn through two TD Points. A supply trendline is drawnbetween a TD Point high (Point “B”) and the most recent prior TD Point low (point“A”) that is strictly greater than point B. The line is then extended to the right ofpoint B according to the rules below. Similarly, a demand trendline is drawnbetween a TD Point low (Point B) and the most recent prior TD Point low (point A)that is strictly less than point B; it may then extend to the right of point B. Notice



that supply trendlines always slope down and demand trendlines always slope up. Agiven TD Point can be the right end of at most one TD Lines, but it can be the leftend of several lines.

Ordinarily, TD Points of any level can determine TD Lines, but optionally TD Pointsof less than a specified level may be disregarded in drawing lines. Also, the numberof times that a TD Point is used as the left end of a line can be limited; in that case,any additional lower high/higher low TD Points will be matched to earlier TDPoints.

Optionally, a TD Lines can be declared “invalid” if the close of the bar just afterpoint B breaks the line (is lower than the projected value of the line at that bar, for ademand line, or higher than the line, for a supply line). If this option is enabled,invalid lines are not drawn on the display.

Once created, a TD Lines is extended to the right until the line is canceled, a TDLine Breakout occurs, or the right edge of the chart is reached. The breakout case isfurther subdivided into qualified and disqualified breakouts. The user must choosewhether the terminate a line when a disqualified breakout occurs, or to continue it tothe right. If a line is terminated at a disqualified breakout. It is drawn dotted or notat all.

Grounds for cancellation of a TD Lines before TD Line Breakout are:

1. Breakout through an opposing TD Lines.

A breakout is penetration of market price through the TD Lines; that is, high of a barexceeds the calculated line value at that bar for a supply line, or low of a bar is lessthan the line value for a demand line. A breakout is recognized only when the priceexceeds the line value by at least N ticks, for a breakout penetration parameter N. (Ifprice exceeds the line by less than this, there is not breakout, and the TD Linescontinues to be extended regardless of qualification conditions.)

A breakout is qualified if one or more these conditions are true:

1. For an upside (supply breakout, the close prior to the breakout bar isa down close (strictly less than the close preceding it). For adownside breakout, the prior close is an up close (greater than thepreceding close).

2. For an upside (Supply) breakout, the open of the breakout bar isabove the TD Lines by at least N ticks (for a parameter-assignableN), and is also above the prior close. For a downside (demand)



breakout, the open of the breakout bar is below the TD Lines by atleast N ticks, and is also below the prior close.

3. An upside (supply) breakout is qualified if the demand value is lessthan the TD Line’s value at the breakout bar by at least N ticks. Thedemand value is the close of the prior bar plus the differencebetween that close and the lesser of the low of that prior bar and thetrue low of the bar preceding it. A downside (demand) breakout isqualified if the supply value is greater than the TD Lines’ value atthe breakout bar by at least N ticks (for a parameter-assignable N).The supply value is the close of the prior bar plus the differencebetween that close and the larger of the high of that prior bar and thetrue high of the bar preceding it (note this difference will benegative).

If a qualified breakout occurs, the TD Lines is ended at that point, and a horizontalprice-projection line is begun at the calculated predicted price. This line is thenextended to the right until canceled or the right edge of the chart is reached.

Grounds for cancellation of a price projection line are:

1. Breakout through an opposing TD Lines.

2. Price penetrates the projection line.

The two conditions above are always checked.

Three additional cancellation rules can be applied using the bar after a breakout.These three rules can be individually enabled or disabled. The price projection lineis canceled if:

1. For an upside breakout, the open of the bar after the breakout bar isbelow the TD Lines’ value at that bar. For a downside breakout, theopen of the bar after the breakout bar is above the TD Lines’ value.

2. For an upside breakout, the high of the bar after the breakout bar isless than the breakout bar’s close and the close of the bar after thebreakout bar is below the TD Lines’ value at that bar. For adownside breakout, the low of the bar after the breakout bar isgreater than the breakout bar’s close and the close of the bar afterthe breakout bar is above the TD Lines’ value at the bar.



3. For an upside breakout, the high of the bar after the breakout bar isless than the breakout bar’s high. For a downside breakout, the lowthe bar after the breakout bar is greater than the breakout bar’s low.

Price projections can be calculated by any of three methods:

1. For an upside breakout, find the lowest low during the interval fromthe TD Lines’ left anchor point to the breakout. Subtract this lowfrom the TD Lines’ value at the bar containing the low. Add thisdifference to the TD Lines’ value at the breakout bar.

For a downside breakout, find the highest high during the intervalfrom the TD Lines’ left anchor point to the breakout. Subtract fromthis high the TD Lines’ value at the bar containing the high.Subtract this difference from the TD Lines’ value at the breakoutbar.

2. For an upside breakout, find the lowest close during the intervalfrom the TD Lines’ left anchor point to the breakout. Subtract thelow of the bar containing the lowest close from the TD Lines’ valueat that bar. Add this difference to the TD Lines’ value at thebreakout bar.

For a downside breakout, find the highest close during the intervalfrom the TD Lines’ left anchor point to the breakout. Subtract fromthe high of that bar the TD Lines’ value at that bar. Subtract thisdifference from the TD Lines’ value at the breakout bar.

3. For an upside breakout, find the lowest low during the interval fromthe TD Lines’ left anchor point to the breakout. Subtract the closeof the bar containing the lowest low from the TD Lines’ value atthat bar. Add this difference to the TD Lines’ value at the breakoutbar.

For a downside breakout, find the highest high during the interval from the TDLines’ left anchor point to the breakout. Subtract from the close of that bar the TDLines’ value at that bar. Subtract this difference from the TD Lines’ value at thebreakout bar.

In all three cases, the difference added to or subtracted from the TD Lines’ value atthe breakout bar is first multiplied by a scaling parameter (normally 100%).



Additional notes: TD Lines and price projection lines will act like normal studylines in that their values at any particular bar can be read off on the Aspen cursorwindow. TD Point indicators appear only on the chart itself, and are ignored by thecursor.

Parameter FunctionTD Points Status Determines whether TD Points are displayed. The

default is Off, or not displayed. Selection is madefrom the Status menu:

The On selection sets the respective field in the TDLine parameters menu to On. The Off selection setsthe respective field in the TD Line parameters menuto Off. The Cancel selection returns you to the TDLine parameters menu without making any changes.

TD Points H/L Whether to use chart or true high/low to establish TDPoints (default is use true High/Low).

TD Points Level Minimum TD Point level to consider while makingTD Lines (Default 1).

TD Points Uses Specifies the number of times a TD Point can be usedto construct a TD Line.

TD Points Color Determines the color in which to draw TD Pointlabels.

TD Lines Status Determines whether qualified TD Lines are displayed.Default is On, or displayed.

TD Lines Select Whether to display only supply TD Line, onlydemand TD Lines, or both. Default is Both, whichdisplays both supply and demand lines. Other optionsare available through the Select menu:

The Both selection sets the respective field in the TD



Line parameters menu to Both. The Supply selectionsets the respective field in the TD Line parametersmenu to Supply. The Demand selection sets therespective field in the TD Line parameters menu toDemand. The Cancel selection returns you to the TDLine parameters menu without changing therespective field.

TD Lines Tick Number of ticks to penetrate TD Lines to register abreakout.

TD Lines Color Determines the color in which to draw TD LinesCanceled Lines Status Determines whether to display disqualified TD Lines.

The default is Off.Canceled Lines Color Determines the color in which to draw disqualified

TD Lines. The default is Gray.Superseded Lines Status Determines the color in which to draw canceled TD

Lines. Default is Off.Superseded Lines Color Determines the color in which to draw canceled TD

Lines. The default is Gray.Projections Status Determines whether qualified TD Line Breakouts are

displayed. The default is On, or displayed.Projections Method Determines the techniques used to calculate the price

objective. The default is 1, or method 1. Selectionsare made using the Method menu:

The methods are defines as follows:

Method 1: calculates the difference between the TDLine and the extreme high/low price immediatelyabove/below the TD Line.

Method 2: calculates the difference between the TDLine and the close of the extreme high/low priceimmediately above/below the TD Line.

Method 3: Calculates the difference between the TDLine and the extreme high/low close immediatelyabove/below the TD Line.



Projections Scale Enables you to select a percentage of the valuecalculated by the Method used. The defaultpercentage is 100%, or the difference itself. Tochange the scale, enter a value greater than 1.

Projections Color Enables you to change the color of projection lines.Validation Rule A specific price chart pattern which invalidates a TD

point used for a TD Line due to steepness.End at Breakout The TD Line continues to search for a qualified

breakout if this parameter is set to Qual. Set to Any,the study will terminate at the first breakout point.Default is Any.

Brkout Qual Rule 1 Determines whether the first breakoutqualification rule is used. The default is On,or used. The first breakout rule is:

The close of the bar prior to upside/downsidepenetration is down/up versus the close twobars ago.

Brkout Qual Rule 2 Determines whether the second breakoutqualification rule is used. The default is On,or used. The second breakout rule is:

The open of the breakout bar exceedsupside/downside the TD Line and also opens above/below the previous bar’s close.

Brkout Qual Rule 3 Determines whether the third breakoutqualification rule is used. The default is On,or used. The third breakout rule is:

The difference between the previous bar’s close andits true low/high added to/subtracted from theprevious bar’s close is less than/greater than the TDLine. A true high is that bar’s high or the close of theprevious bar, whichever is greater; a true low is thatbar’s low or the close of the previous bar, whichever



is less.Brkout Pen Ticks 2 Additional tick penetration required to qualify

breakout.Brkout Pen Ticks 3 Additional tick penetration required to qualify

breakout.Qual Cancel 1 Determines whether the first cancellation

rule is used. The default is on, or used.

The first cancellation rule is:

The TD Demand Line (up-sloping) breakout iscanceled if the next bar’s high is less than theprevious close and closes below the TD DemandLine; the converse applies for a TD Supply Line.

Qual Cancel 2 Determines whether the second cancellationrule is used. The default is on, or used. Thesecond cancellation rule is:

The TD Demand Line breakout is canceled if the pricefails to make a higher high in the next bar; converseapplies for a TD Supply Line.

Qual Cancel 3 Determines whether the third cancellationrule is used. The default is on, or used. Thethird cancellation rule is:

The TD Demand Line breakout is canceled if the nextbar’s open is beneath the TD Demand Line and it’sclose is below the TD Demand Line; converse appliesfor a TD Supply Line.

Disqual Cancels 1 Determines whether disqualified lines canceled usingrule 1 are displayed. The default is On, or displayed.



Trendlines Trend Factors™


Cancellation Rules1. The TD Demand Line (up-sloping) breakout is canceled if the next

bar’s high is less than the previous close and closes below the TDDemand Line; the converse applies for a TD Supply Line.

2. The TD Demand Line breakout is canceled if the price fails to makea higher high in the next bar; converse applies for a TD SupplyLine.

3. The TD Demand Line breakout is canceled if the next bar’s open isbeneath the TD Demand Line and it’s close is below the TDDemand Line; converse applies for a TD Supply Line.

Trend Factors™Trend Factors is designed to project upside resistance levels and downside supportlevels by multiplying qualified highs, lows, or closes by a series of prescribed ratios.

Once the market has moved up approximately 1.0556 in price from a low, areference high is identified. Place the study cross-reference on that high or high dayclose. The Trend Factors projects down to the support area of .9444, as well assecondary levels. Conversely, once a market has moved down to approximately.9444 in price from a high, a reference low is identified. Place the study cross-reference on that low or low day close. The Trend Factors will project up to theresistance area of 1.0556, as well as secondary levels.



The study command for Trend Factors is .TDFACTOR.



Trend Factors™ Parameters

The Trend Factors study also has Date and Time parameters, which identify the date and time of the reference bar. As with any trend line drawing function, the process of drawing a Trend Factors study involves selecting a reference bar, and selection specifies the Date and Time parameters.

Retracements TD Retracement Arc™


RetracementsSeveral DeMark studies are available through the trend lines feature. These studiesinclude:

TD Relative RetracementTD Absolute RetracementTD Factor (Trend Factors™)TD Arc.

TD Retracement Arc™ TD Retracement Arc displays graphically support and resistance levels which aredefined by incorporating both price and time to establish retracement levels.

The TD Arc study is an Aspen trendline draw function. Selecting TD Arc from the Trendline Functions menu prepares the trendline cursor to draw the TD Arc retracement. Clicking on a bar in the chart defines an anchor point, or reference bar, for the retracement. The retracement lines can be modified or deleted in the same way as other Aspen trendlines, and their respective retracement levels are

Retracements TD Retracement Arc™


available in the cursor window.

A click is assumed to refer to the high, low, open, or close of a displayed bar; the software locates the nearest such point and uses it as the exact reference point. To be more precise, the software first finds the horizontally nearest bar column, then chooses the vertically closest reference point within that column. If multiple data items are on display, the one with the vertically closest reference point is chosen. (Formula data items are not eligible to be chosen.) Only high and low points are eligible.

TD Retracement Arc™ Parameters

The TD Retracement Arc study also has Date and Time parameters, which identifythe date and time of the reference bar. As with any trend line drawing function, theprocess of drawing a TD Retracement Arc study involves selecting a reference bar,and selection specifies the Date and Time parameters.

TD Retracement Arc draws elliptical trendline curves. The anchor point and magnetprice are determined in the same way as for Relative Retracement. Also, thesoftware calculates the distance (number of bars) from the anchor bar to the high orlow bar whose close determines the magnet price. Then, the trendline curve forfraction F is a segment of a quarter ellipse starting horizontally at the anchor point,and ending vertically at price:

Retracements Relative Retracement


The trendline curve terminates early if it touches a price bar before reaching the end point.

Lines Parameters in TD Retracement ArcThe defaults vary. Set to On, a retracement level is drawn. Set to Off, the respectiveretracement level is suppressed.

Scale Parameter in TD Retracement ArcThe Scale field enables you to adjust the shape of the ellipse drawn by the TDRetracement Arc. This field applies only to the TD Retracement Arc.

Relative RetracementTD Relative Retracement is a purely objective or mechanical method for displaying Fibonnaci retracement levels from designated lows and highs. These levels define areas of support or resistance. Retracement levels will appear as dashed lines until price penetrates them and is preceded by a qualified bar. Retracement levels are calculated as follows: from a low bar, refer to the last time a lower bar appeared and select the highest high between these two points and subtract the difference between those two points or from a high bar, refer to the last time a higher bar appeared and select the lowest low between these two points. By placing the cursor on these lows or highs and by selecting the desired Retracement settings, the levels are presented graphically.



The Relative Retracement study is an Aspen trendline draw function. Selecting TDRelative Retracement from the Trendline Functions menu prepares the trendlinecursor to draw the Relative Retracement. Clicking on a bar in the chart defines ananchor point, or reference bar, for the retracement. The retracement lines can bemodified or deleted in the same way as other Aspen trendlines, and their respectiveretracement levels are available in the cursor window.

A click is assumed to refer to the high, low, open, or close of a displayed bar; thesoftware locates the nearest such point and uses it as the exact reference point. To bemore precise, the software first finds the horizontally nearest bar column, thenchooses the vertically closest reference point within that column. If multiple dataitems are on display, the one with the vertically closest reference point is chosen.(Formula data items are not eligible to be chosen.) Only high and low points areeligible.)

The study command for Range Expansion Index is .TDREI.

For further information on Relative Retracement, please refer to Thomas R.



DeMark, The New Science of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 2.

Qualifying Relative Retracement By qualifying a retracement level, the probability of identifying a successfulintraday breakout is enhanced if any of the following occur:

1. The close of the prior bar to the upside (downside) penetration isdown (up) versus the close two bars ago, OR

2. The open of the first bar exceeds upside (downside) the retracementlevel, OR

3. The difference between the previous bar’s close and its true low(true high and close) added to (subtracted from) the previous bar’sclose is less than (greater than) the retracement level. A true high isthat bar’s high or the close of the previous bar, whichever is greater.A true low is that bar’s low or the close of the previous bar,whichever is lesser.



Relative Retracement Parameters

The TD Relative Retracement study also has Date and Time parameters, whichidentify the date and time of the reference bar. As with any trend line drawingfunction, the process of drawing a Relative Retracement study involves selecting areference bar, and selection specifies the Date and Time parameters.

This trendline type draws one or more horizontal lines representing fractionalretracements of a prior price excursion.

Given a selected high or low (opens and closes are not eligible anchor points for thisstudy), the software looks back for a prior bar having a higher high or a lower low,respectively. If no such bar is found on the portion of the displayed chart, no line isdrawn because the software does not look at the data that is not displayed. Havingfound such a bar, all the bars between that bar and the anchor point bar (inclusive)are scanned to find the bar having the lowest low (if a high anchor) or highest high(if a low anchor). The close of that bar is taken as the magnet price.

A trendline is drawn from the anchor point bar rightwards to the end of the visiblechart or until one of these conditions occurs:

Retracements Absolute Retracement


1. The trendline is penetrated by a price bar (price falls below thetrendline, in the case of a trendline below the anchor price, orexceeds the line, in the case of a line above the anchor price).Penetration must be by at least N ticks, for selectable N.Optionally, penetrations may terminate the line only if they arequalified, using the same three rules that qualify breakouts for TDLines. As with TD Lines, the three TD Retracement Qualifierconditions can be individually enabled or disabled, and separatepenetration distances are supplied for TD Retracement Qualifierrules 2 and 3.

2. The trendline is canceled according to one of the same threeoptional cancellation rules available for TD Lines.

Trend Line options include:

1. Number of ticks needed to penetrate trendline.

2. Whether to continue past disqualified breakouts.

3. Enable/disable three TD Retracement Qualifier conditions (as perTD Lines)

4. TD Retracement Qualifier penetration parameters as per TD Lines.

5. Enable/disable three cancellation conditions (as per TD Lines).

6. For each fraction level, whether to draw a line and a line color.

Lines Parameters in Relative RetracementThe defaults vary. Set to On, the retracement level is drawn. Set to Off, theretracement level is suppressed. 0.000 is the Magnet Line of the high bar close/lowbar close.

Absolute RetracementAbsolute Retracement is applied once a market’s price advance is at an all-time highor low. Consequently, Relative Retracement cannot be used since there exists noreference point historically. Absolute Retracement is applied to the high bar/low bar.Retracement ratios will be displayed to the downside/upside and can be used assupport levels/resistance levels.



The Absolute Retracement study is an Aspen trendline draw function. Selecting TDAbsolute Retracement from the Trendline Functions menu prepares the trendlinecursor to draw the Absolute Retracement. Clicking on a bar in the chart defines ananchor point, or reference bar, for the retracement. The retracement lines can bemodified or deleted in the same way as other Aspen trend lines, and their respectiveretracement levels are available in the cursor window.

A click is assumed to refer to the high, low, open, or close of a displayed bar; thesoftware locates the nearest such point and uses it as the exact reference point. To bemore precise, the software first finds the horizontally nearest bar column, thenchooses the vertically closest reference point within that column. If multiple dataitems are on display, the one with the vertically closest reference point is chosen.(Formula data items are not eligible to be chosen.) Only high and low points areeligible.

For further information on Absolute Retracement, please refer to Thomas S.DeMark, The New Science of Technical Analysis, New York: John Wiley & Sons,1994, Chapter 2, Retracements.



Absolute Retracement Parameters

The Absolute Retracement study also has Date and Time parameters, which identifythe date and time of the reference bar. As with any trend line drawing function, theprocess of drawing a Absolute Retracement study involves selecting a reference bar,and selection specifies the Date and Time parameters.

The Absolute Retracement is similar to the Relative Retracement study except thatno search for a prior high/low occurs; instead, the retracement lines are drawn atabsolute multiples of the anchor price. Allowable multiples are 0.382, 0.618, 1.382,1.618, and 2.618. All else is the same as relative retracement.

Lines Parameters in Absolute RetracementThe defaults vary. Set to On, the retracement level is drawn. Set to Off, theretracement level is suppressed.

Overbought/Oversold Range Expansion Index™


Overbought/OversoldDeMark overbought/oversold studies attempt to identify zones of high- and low-riskbuying opportunities. Overbought/Oversold studies include: Range ExpansionIndex, Range Expansion Breakout, and DeMarker Indicator.

Range Expansion Index™ The Range Expansion Index (REI™) identifies areas of price exhaustion generallyassociated with price peaks and troughs. This indicator is selective in the sense thatit compares current price activity with recent price movement, but it ignoresbreakaway price moves until its steepness begins to dissipate. For better results, ifthe number of bars outside the band is 5 or fewer, a potential top or bottom has beenformed. Generally. this is confirmed once a down/up close versus the previous day’sbar is recorded.



The study command for Range Expansion Index is .TDREI.

For further information on Range Expansion Indicator, please refer to Thomas R.DeMark, The New Science of Technical Analysis, New York: John Wiley & Sons,1994, Chapter 3, Overbought/Oversold.

Range Expansion Index Parameters

The Range Expansion Indicator will turn from black to white when it moves from an

oversold to an overbought zone; it turns blue when it moves back to an oversold



zone.

This study draws a graph of range expansion values, which fluctuate between +100 and -100. It would typically be drawn in its own chart subwindow. Optionally, dotted reference lines can be drawn at user-set values, but these lines do not affect the calculation or display of the REI line itself.

Field FunctionDescription Field The description field lists the study elements in the REI.

There are three study elements in the Range Expansion Index:

TD REI The study’s green line.Ref A The upper reference line.Ref B The lower reference line.

Status Field Default is On. Set to On, reference lines are drawn. Set toOff, reference lines are suppressed. Options are selectedusing the Status menu, which controls whether the referencelines in the Range Expansion Index study are displayed.

Selecting Off suppresses both lines. Selecting On displaysboth lines.

Avg. Type Field Displays the operative moving average calculation. Selectingthe moving average type displayed in the field displays theAvg. Type menu:

The Simple selection causes the Simple moving averagecalculation to be used in calculating the study. The Modified



selection causes the Modified moving average calculation tobe used in calculating the study. The Exponential selectioncauses the Modified moving average calculation to be used incalculating the study. The Weighted selection causes theWeighted moving average calculation to be used incalculating the study. The Hamming selection causes theHamming moving average calculation to be used incalculating the study.

Period Parameter Default is 5 periods. Defines the number of time periods.Compare Field Specifies the number of bars to survey. The default is 2, or

two bars back.Check Field Specifies the distance (in bars) to the bar or bars (as

set in the Compare field) used for comparison.

Equal Field Specifies the operator used to make comparisons.The default is On, which means equality is on(greater than or equal / less than or equal to). Set tooff, comparison is made as strictly greater than orstrictly less than:

ON = >= / <=OFF= > / <

Ref Field Default is 45 for the Ref A, and -45 for Ref B. The referencelines specify band levels for overbought/oversold conditions.

Color Field Default is Green. Selecting any of the value in this fielddisplays the Color menu. Choosing an alternative color fromthe menu changes the color of the respective study element.

Graph Field Default is Line. Selecting any of the values in this fielddisplays the Graph menu. Choosing an alternative selectionfrom the menu changes the rendering of the respective studyelement.

Overbought/Oversold Range Expansion Breakout


The Bars selection renders the study element as bars. TheLine selection renders the study element as a line. TheHistogram selection renders the study element as a histogram.The Dots selection renders the study element as larger dots.The Dotted selection renders the study element as smallerdots. The Not Drawn selection suppresses the study element.

Range Expansion Breakout This study identifies high and low breakout values for the next bar of a series. Ashort horizontal line is drawn at the projected breakout high and low. The defaultchart position will shift left a bar when this study is active.



The projections for a bar are based on the price activity immediately preceding bar orseries of bars.

The price is the previous bar’s close, or current bar’s open (or other user-selectableprice). The range is either the previous bar or series of bars. The factor is user-selected.

The user may compute and draw projections for all bars or for only the current andsucceeding bars. The study command for Range Expansion BreakOut is .TDREBO.

Range Expansion BreakOut Parameters



Field FunctionMovement Field Lists the two elements, or movements, of the Range

Expansion BreakOut Study.

Up Displays the parameters for the Top markDown Displays the parameters for the Bottom mark

Period Parameter Default is 1. Determines the number of periods, or precedingbars, surveyed to calculate the breakout.

Range Field Default is Average. Enables you to select specifications forthe bar(s) used to calculate the breakout. Selecting the valuein this field displays the Range Menu:

C/T Field The default is True High. Enables you to select the Chart orthe True High. Selecting this field displays the C/T menu:



Factor Field Enables you to enter a scale factor. The defaultscale factor is 0.618; other recommended factorsinclude:

0.382

0.618

1.0

1.3821.618

Display Parameter Displays the Plot At menu, which enables you tochoose where on the chart you want the studydisplayed.

The default is Current (current bar).Base Field Displays the Price menu, which displays a set of prices

available to serve as the Center price for the projection.



The default is Prev Close, or previous close.Color Field Enables you to change the colors for the respective study

elements.

User Quals ParametersThis section of the parameters menu contains customizable qualifiers that helpperfect breakout prices.

Field FunctionStatus Field Specifies whether the respective user qualification is on or off.

The default is off, or not used. Selection is made using theStatus menu.

Price (1) Field Specifies the first comparison price in the respective userqualification. The default is Close. Selection is made using thePrice (Upside/Downside) menu:

Ago (1) Field Specifies the number of bars to survey to identify the selectedprice. The default is 1, or one bar back. This value is adjustedusing the edit box.

Compare Field Specifies the comparison operator used in the respective userqualification. The default is <, or less than. Selection is madeusing the Comparison (Upside/Downside) menu:



Price (2) Field Specifies the second comparison price in the respective userqualification. The default is Close. Selection is made using thePrice (Upside/Downside) menu:

Ago (2) Field Specifies the number of bars to survey to identify the selectedprice. The default is 1, or one bar back. This value is adjustedusing the edit box.

Join Field Specifies the Boolean operator used to join multipleuser qualifications. The default is AND, which meansall user qualifications must be true. Selection is madeusing the User Quals joined by menu:

Overbought/Oversold DeMarker Indicator™


Selecting the OR operator means that any userqualification must be true.

DeMarker Indicator™ The DeMarker Indicator identifies potential price bottoms and tops. It accomplishesthis by making price comparisons from one bar to the next and measuring the levelof price demand.



The study command for DeMarker Indicator is .TDDMI.

For further information on the DeMarker Indicator, please refer to Thomas R.DeMark, The New Science of Technical Analysis, New York: John Wiley & Sons,1994, Chapter 3, Overbought/Oversold.



DeMarker Indicator™ Parameters

This study draws a graph of DMI values, which fluctuate between 0 and 100.Optionally, dotted reference lines can be drawn at user-set values, but these lines donot affect the calculation or display of the DMI line itself.

The DMI computes two values at any given bar:

[ ]( )DMIHigh MAX High High K bars ago ,0= −

[ ]( )DMILow MAX Low k bars ago Low,0= −

The final DMI study value is then computed as an N-bar moving average of DMIHigh, divided by an N-bar moving average of (DMIHigh+DMILow), and multipliedby 100 to give a result in the desired range. The type and length of the movingaverages are selectable. DMI outputs a gap at any gap bar, but gap bars are ignoredin counting back from a non-gap bar.

Field FunctionDescription Field Lists the three elements of the DeMarker Indicator study:

TD DMIThe DeMarker Indicator line.Ref A The upper reference line.Ref B The lower reference line.

Status Field Default is On. Determines whether Reference Line A isdisplayed.

Avg. Type Field Default is Simple. Determines which moving average



calculation is used to calculate the DMI.Period Parameter Specifies the number of periods calculated in the moving

average. The default is 8.0.Compare Field Comparison distance, in bars. The default is 1, or 1 bar.Ref Field Specifies the band parameters for overbought/oversold

conditions. Defaults are 63.0 for the upper band and 37.0 forthe lower band.

D-Wave™ DeMarker Indicator™


D-Wave™D-Wave is an objective form of wave analysis. It defines price waves mechanically.D-Wave uses patterns that are defined by a series of Fibonnaci highs and lows. Thisapproach makes D-Wave objective, e.g., Wave 1 could be identified as an 8 bar high,a high higher than all previous 7 bars’ highs. The succeeding waves 2, 3, 4, and 5, aswell as the correction waves, use Fibonnaci numbers.



D-Wave displays waves according to the following logic:

For Up-Waves,High of 1 is less than the low of 4, andHigh of 1 is less than the high of 3, andHigh of 3 is less than the high of 5.

For Down-Waves,Low of 1 is greater than the high of 4, andLow of 1 is greater than the low of 3, andLow of 3 is greater than the low of 5.

Level PriceWave Start 21 LowWave 1 8 HighWave 2 5 LowWave 3 13 HighWave 4 8 LowWave 5 21 High

D-Wave™ D-Wave™ Parameters


Wave A 13 LowWave B 8 HighWave C 21 Low

Reverse logic for sells.

The study command for D-Wave Analysis is .TDWAVE.

For further information on D-Wave, please refer to Thomas R. DeMark, The NewScience of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 4,Wave Analysis.

D-Wave™ Parameters

This study identifies D-Wave. The wave counts drawn above or below the high orlow of each key bar of the pattern. (D-Wave values do not appear in the cursorwindow.) Each wave is defined by relationships between highs and lows.

If an up-wave search is requested, the start section is required to end on a price lessthan the preceding prices; then the next section ends on a price greater thanpreceding prices; and subsequent sections alternate less than and greater thanconditions. A down-wave ends on a greater-than condition, and subsequent sectionsalternate less-than and greater-than conditions.

The first, or “start” section is labeled with an “S”; the remaining sections are labeledwith “1”, “2”, “3”, “4”, “5”, “A”, “B”, and “C”. Each label is drawn above its bar



when the price condition is greater-than, below its bar when the price condition isless-than.

When the “peak check” option is selected, section endpoints are required to haveprices above or below prior prices as follows. (None of the tests defined in the nexttwo paragraphs are applied if “peak check” is off.)

For an “up” wave, point 3 must have a price greater than the highest high betweenpoints 1 and 2 inclusive, and point 5 a price greater than the highest high betweenpoints 3 and 4 inclusive. An L-bar high that is not higher than the preceding highprice is ignored, and the section continues. Furthermore, the lowest low pricebetween points 2 and 3 inclusive must be greater than the lowest low between pointsS and 1 inclusive, and the lowest low between points 4 and 5 must be greater thanthe lowest low between points 2 and 3. If either of these latter two conditions areviolated, the up-wave formation is aborted, and a search for a new S point beginsfollowing point 2 or 4 respectively. Finally, point C is not recognized until it has aprice less than the lowest low between points A and B inclusive.

For a “down” wave, the tests are reversed. Point 3 must have a price less than thelowest low between points 1 and 2 inclusive, and point 5 a price less than the lowestlow between points 3 and 4 inclusive. Furthermore, the highest high between points2 and 3 inclusive must be less than the highest high between points S and 1 inclusive,and the highest high between points 4 and 5 must be less than the highest highbetween points 2 and 3. If either of these latter two conditions are false, the down-wave formation is aborted, and a search for a new S point begins following point 2 or4 respectively. Finally, point C is not recognized until it has a price greater than thehighest high between points A and B inclusive.

The user can select the length and highest high/lowest low price for each section ofthe wave. In addition to the usual High, Low, Close price options, select a “High ifUp wave, Low if Down wave” and “Low if Up wave, High if Down wave” choices;these will allow building symmetrical wave definitions.

You need to select the period to display the D-Wave. Please note that the wave onlyconsiders bars displayed in the chart.

Once the wave counts are defined, the user is able to make price projectionsusing a multiplier, which is accessible in the multiplier field.

The study command for TD Wave is .TDWAVE.

Field FunctionDescription Field Lists the elements in the D-Wave study:



D-WaveDirection Field Indicates which kind of waves are displayed by the D-Wave

Analysis study (the default is Up). Selecting the word in theDirection field displays the Up/Down menu:

Selecting Up causes the D-Wave Analysis study to displayonly up waves; selecting Down causes the study to displayonly down waves.

Peak Check Field Whether to enable peak value checks. Selecting the word inthis field displays the Status menu. The default is On

Color Field Indicates the color used to render all labels. Selecting theword in this field displays the Color menu, which enables youto change the color of all labels. The default color for alllabels is Green.

Segment Field Start12345ABC

Length Field Identifies the Length of the respective study element.Defaults are as follows:

Start 211 82 53 134 8



5 21A 13B 8C 21

Price Field Indicates the price used to calculate the D-Wave Analysisstudy. Selecting a word in the price field displays the Pricemenu. Defaults for the different study elements are asfollows:

Start Low/Up, High/Down1 High/Up, Low/Down2 Low/Up, High/Down3 High/Up, Low/Down4 Low/Up, High/Down5 High/Up, Low/DownA Low/Up, High/DownB High/Up, Low/DownC Low/Up, High/Down

Selections are made using the Price menu, which contains thefollowing selections:

Prediction Field Determines whether the D-Wave prediction is displayed. Thedefault is On, or displayed. Selection is made using the Statusmenu.

Base Field Specifies the Base for the D-Wave prediction. The default isStart. Selection is made using the Base menu:



Multiplier Field Specifies the Multiplier used in the D-Wave prediction. Thedefault is 1.618. Selection is made using the Multiplier menu.

Start Field Specifies the starting segment for the D-Wave prediction.The default is Start. Selection is made using the Start menu.



End Field Specifies the ending segment of the D-Wave prediction. Thedefault is 1. Selection is made using the End menu.

Moving Averages TDMA I


Moving AveragesDeMark moving average studies introduce unconventional calculation techniquesdesigned to counteract the problem inherent in all moving average approaches:trading range and sideways markets.

Studies:

TDMA ITDMA IITD Channel ITD Channel IITD Channel III

TDMA I TDMA I displays the moving average of highs and/or lows beginning with thecurrent bar. The moving averages only appear once a new high bar or new low barexceeds all highs/lows of a selected range of bars. TDMA I is helpful as an exit or asa stop loss indicator.



The study command for TDMA I is .TDMA1.

For further information on TDMA I, please refer to Thomas R. DeMark, The NewScience of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 6,Moving Averages.



TDMA I Parameters

This study draws interrupted moving average lines. Two moving averages aredrawn, but only when particular conditions hold.

Moving average A is computed on the High prices (actually on any selectable price,but High would typically be used). Moving average B is computed on the Lowprices (again selectable). Moving average type and length are selectable, but thesame type and length parameters are used for both A and B.

The averages are computed continuously (this makes a difference for exponentialaverages, for example). But they are drawn only in intervals determined by thefollowing conditions. A count parameter C and a length parameter L are used.

Line A begins to be drawn whenever the High price is strictly less than all C-1preceding Highs. The line continues to be drawn while this condition remains true,and for L-1 additional bars when it ceases to be true. (No gap occurs if the conditionbecomes true again within L bars.)

Line B begins to be drawn whenever the Low price is strictly greater than all C-1preceding Lows. The line continues to be drawn while this condition remains true,and for L-1 additional bars when it ceases to be true.

Two scaling factors are provided, each of which scales the values of one line by anabsolute multiple.

In addition, a “projection” (Proj.) factor is provided. This shifts the output to theright by X percent of the moving average length (rounded to the nearest integernumber of bars). Both the MA computations and the determination of the drawingintervals are done in sync with the input data; the TD Price Projector simply delaysthe final output by some number of bars.

Field FunctionDescription Field Lists the elements of the TD MA1 study:

Average A



Average BAvg. Type Field Enables you to change the moving average calculation for

Average A. The default is simple. Selecting the word in thefield displays the Avg. Type menu.

Period Field Specifies the number of periods used to calculate the movingaverage for Average A. The default is 3 periods.

Count Field Specifies the number of periods the average will render once anew high or low is reached. The default is 13.

Length Field Specifies the period for which the moving average displays.The default is 4.

Proj Field Specifies the percentage the moving average can extend intothe future. The default is 0.0.

Price Field Displays the Price menu, from which alternative prices can bechosen for calculating the moving average for both Average Aand Average B. The Price menu contains the followingselections:

The H, L Midpt Selection selects the mid-point of the highand low prices as the price used to calculate the respectivestudy element. The H, L, C Avg Selection selects the averageof the high, low, and close prices as the price used to calculatethe respective study element. The Tick Average Selectionselects the average of the ticks that comprise a bar as the priceused to calculate the respective study element. The First Studyselection selects the value of the first study in the chartwindow as the price used to calculate the respective studyelement.

Scaling Field High Factor specifies the multiplier applied to Average A.The default is 100. Low Factor specifies the multiplierapplied to Average B. The default is 100.

Moving Averages TDMA II


TDMA IITDMA II is a series of two moving averages. It is displayed unlike other movingaverages. Each moving average is compared to its value “X” bars earlier and eachwill turn blue if ascending and red if descending.

The study command for TDMA II is .TDMA2.

TDMA II Parameters

This study draws two-color moving average lines. Each moving average iscomputed and drawn independently.

Moving Averages TD Channel I


Each moving average is an ordinary moving average of specifiable type and length,computed on a specifiable price selector. An absolute scaling percentage and aprojection percentage can also be selected; these have the same meaning as forTDMA I.

In addition, a comparison length X is calculated for each moving average. Themoving average line is drawn in one color when its current value is greater than itsvalue of X bars ago; otherwise it retains its original color.

Field FunctionDescription Field Lists the study elements in TD MA2, of which there are two:

Average AAverage B

Avg. Type Field Specifies which moving average calculation the study uses.Selecting the word in this field displays the Avg. Type menu,from which you can select an alternative moving averagecalculation. The default is Simple.

Period Field Number of periods, respectively, used to calculate the movingaverages. Default for Average A is 13. Default for Average Bis 55.

Length Field Specifies the bar used for comparison. The default for bothaverages is 1, or one bar back.

Scaling Field Specifies the multipliers applied to the high/low of the movingaverage,. The default for both averages is 100%.

Proj Field Specifies the percentage that the respective average can beextended into the future. Default for both averages is 0.0.

Price Field Specifies the price used for comparison. Selecting the word inthis field displays the Price menu, from which you can selectan alternative comparison price. Default for both averages isClose.

Color Field Indicates the color of the respective average. Selecting theword in this field displays the Color menu, from which analternative color can be selected. Default for Average A isGreen. Default for Average B is Red.

Graph Field Indicates the rendering method of the respective average.Selecting the word in this field displays the Graph menu.Default for both averages is Line.

TD Channel ITD Channel I represents the market’s tendency to trade within a price band.



The extremes are defined as:

High band—1.12% above the 3 day moving average of the lows.Low band—.988% above the 3 day moving average of the highs.

The study command for Channel 1 is .TDCH1.



TD Channel I Parameters

This study draws “channel” lines above and below the price action.

The computation is simply a pair of independent moving averages applied toselectable price values, multiplied by an absolute scaling percentage, and optionallyoffset by a given number of bars.


Field FunctionDescription Field Lists the study elements in TD Channel I, of which there are

two:

Top ChannelBottom Channel

Avg. Type Field Indicates the moving average calculation used to plot therespective study element. Selecting the word in this fielddisplays the Avg. Type menu, which enables you to select analternative moving average calculation. The default for bothelements is Simple.

Period Field Indicates the number of periods used in calculating therespective study element. The default for both study elementsis 3.

Scaling Field Indicates the scaling factor, or moving average multiplier, forthe respective study element. The default for the Top Channelis 103.0; for the Bottom Channel, the default is 97.0.

Shift Field Indicates how many bars the respective study element hasbeen shifted, forward or backward in time (positive numbersare future, negative are past). The default for both studyelements is 0.0, or no shift.

Price Field For the respective study element, the word in this fieldIndicates the price that is multiplied by the ratio. Selectingthe word in this field displays the Price menu, from which youcan choose an alternative price. The default for the Top

Moving Averages TD Channel II


Channel is Low. The default for the Bottom Channel is High.Color Field Indicates the color in which the respective study element is

rendered. Selecting the word in this field displays the Colormenu, which enables you to choose an alternative color. Thedefault for the Top Channel is Green. The default for theBottom Channel is Red.

Graph Field Indicates the rendering method for the respective studyelement. Selecting the word in this field displays the Graphmenu, from which you can select an alternative renderingmethod. The default for both study elements is Line.

TD Channel IITD Channel II represents the market’s tendency to trade within a price band.




High band—1/2 of 1% above the 3 day moving average of the highs.Low band—1/2 of 1% below the 3 day moving average of the low.




TD Channel II Parameters

This study is absolutely identical to TD Channel 1 except that it employs differentdefault values.


Field FunctionDescription Field Lists the study elements in the TD Channel 2, of which there

are two:



Period Field Indicates the number of periods used in calculating therespective study element. The default for both study elementsis 3.0.


Shift Field Indicates how many bars the respective study element hasbeen shifted, forward or backward in time (positive numbersare future, negative are past). The default for both studyelements is 0.0, or no shift.

Price Field For the respective study element, the word in this fieldIndicates the price that is multiplied by the ratio. Selectingthe word in this field displays the Price menu, from which youcan choose an alternative price. The default for the TopChannel is High. The default for the Bottom Channel is Low.

Color Field Indicates the color in which the respective study element isrendered. Selecting the word in this field displays the Color

Moving Averages TD Channel III


menu, which enables you to choose an alternative color. Thedefault for the Top Channel is Green. The default for theBottom Channel is Red.


TD Channel IIIChannel III represents the market’s tendency to trade within a price band.




Upper band—a 3 day moving average of the median (middle) high of the last fivedays.Lower band—a 3 day moving average of the median (middle) low of the last fivedays.




TD Channel III Parameters

This study draws “Channel” lines above and below the price action.

A pair of independently computed lines are drawn. The calculation for each line isidentical except for the price selector.

For each bar, the median price over X bars is calculated (the middle value amongthat bar’s price and the preceding X-1 non-gap prices; if X is even, take the averageof the two middle prices). Then perform an N-bar moving average calculation on themedian-price series. The output series can optionally be delayed (offset) by aspecified number of bars.


Field FunctionDescription Field Lists the study elements in the TD Channel 3, of which there

are two:



Period Field Indicates the number of periods used in calculating therespective study element. The default for both study elementsis 3.0.

Median Field Indicates the median for the respective study element. Thedefault for both elements is 5.


Shift Field Indicates how many bars the respective study element has



been shifted, forward or backward in time (positive numbersare future, negative are past). The default for both studyelements is 0, or no shift.

Price Field For the respective study element, the word in this fieldIndicates the price that is multiplied by the ratio. Selectingthe word in this field displays the Price menu, from which youcan choose an alternative price. The default for the TopChannel is High. The default for the Bottom Channel is Low.

Color Field Indicates the color in which the respective study element isrendered. Selecting the word in this field displays the Colormenu, which enables you to choose an alternative color. Thedefault for the Top Channel is Green. The default for theBottom Channel is Red.


Sequential™ TD Channel III


Sequential™ Sequential is a series of studies designed to identify price exhaustion peaks andtroughs. A series of price comparisons are made to identify these prospective turningpoints.

Sequential is a pattern recognition technique designated to identify both high riskand low risk entry zones. This approach is contratrend since it anticipates areas ofprice exhaustion which often occur just prior to, or coincident with, price turningpoints. There are two components to Sequential: the Setup and the Countdownphases. Whereas minor price reversals are generally associated with the completionof Setup, major turning points are typically identified upon completion ofCountdown.

A low risk Setup is a series of “X” consecutive trading bar closes less than the close“Y” trading bar closes earlier. These are displayed on a chart with blue numberspositioned beneath each respective bar. Conversely, a high risk Setup is a series of“X” consecutive trading bar closes greater than the close “Y” trading bar closes

Sequential™ Sequential Parameters


earlier. These are displayed on a chart with red numbers positioned above eachrespective bar.

The command for Sequential is .TDSEQUENTIAL.

For further information on Sequential, please refer to Thomas R. DeMark, The NewScience of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 7,Sequential.

Sequential ParametersFor all Sequential studies, the following parameters can be set.

Parameter FunctionUser Quals Field Lists the available user qualifications that govern cancellation.

There are 10 available qualifications you can define, namedQual 1 to Qual 10. See, Qualifying Sequential.

Status Field 2 Indicates whether the user qualification is in effect, that is,whether it is currently being applied. The default is Off.Selecting any word in this field displays the Status menu,which enables you to change the state.

Price Field 2 Indicates the price used as a basis for comparison in defining auser qualification. The default is Low. Selecting the value inthis field displays the Price menu, which enables you to selectan alternative basis price. The Price menu contains thefollowing selections:

Bar Field Specifies the basis reference bar. The default is 1, or one barback.

Of Field Indicates whether the user qualification applies to Setup orCntdn (Countdown). The default is Setup. Selecting this worddisplays the Section menu, which enables you to change thissetting. The section menu contains the following selections:

Sequential™ Sequential Parameters


Setup allows display of the Setup only.Cntdn allows display of the Countdown only.

Buy Rel Field Specifies the operator that defines the user qualification’scomparison. The default is < (less than). Selecting theoperator in this field displays the Rel menu, which enables youto choose an alternative operator for the respective userqualification. The Rel menu contains the following selections:

< Less Than<= Less Than or Equal To> Greater Than>= Greater Than or Equal To

Price Field 3 Indicates the price that is compared to the basis price (which isspecified in the other Price field). The default is Low.Selecting the value in this field displays the Price menu, whichenables you to select an alternative basis price.

Bar Field 2 Specifies the bar compared to the basis reference bar (which isspecified in the other Bar field). The default is 1, or one barback.

Of Field 2 Indicates whether the user qualification applies to Setup orCntdn (Countdown). The default is Setup. Selecting this worddisplays the Section menu, which enables you to change thissetting.

Sequential™ Setup™ Parameters


Setup™ Parameters

Prior to completion of Setup, the Setup must be “perfected” or “qualified” bysuccessfully fulfilling a process called Intersection. Countdown will not commenceuntil Intersection has been completed. Intersection occurs for a low risk Setup oncethe high of bar eight (8) or of bar nine (9) or the first subsequent bar to any standardnine (9) bar Setup is greater than or equal to the low of any bar three of more barsearlier up to and including the first bar of the Setup. Conversely, Intersection occursfor a high risk Setup once the low of bar eight (8) or of bar nine (9) or the firstsubsequent bar to any standard nine (9) bar high risk Setup is less than or equal to thehigh of any bar three or more bars earlier up to and including the first bar of theSetup.



Parameter FunctionDescription Field Lists the elements in the Sequential study, of

which there are five:1. Setup

2. Intersection

3. Countdown

4. Cancel Cond

5. RecycleLength Parameter This selection determines the number of consecutive trading

bar comparisons required to establish the Setup. The defaultis 9.

Period Parameter Identifies the specific reference bar used to establish theSetup. The default is 4, which specifies that the fourth barback is the reference bar.

Price Parameter Determines the reference price used to form the Setup. Thedefault is Close, which means the reference price is theclose n bars ago, where n is the Period value (default 4).Selecting the word in this field displays the Price menu,which enables you select an alternative price for thereference bar.

Equality Parameter Set to On, comparisons are made using the greater-than-or-equal-to and less-than-or-equal-to operators. Set to Off,comparisons are made using the greater-than and less-thanoperators. The default is On. Selecting the word in thisfield displays the Status menu, which enables you to changethis setting.

Color Parameter Indicates the color in which Setup labels are displayed.Default is Green. Selecting the word in this field displaysthe Color menu, which enables you to choose an alternativecolor.



Cancel Cond ParameterThis parameter enables the user to invoke the conditions that cancel the Setup onceCountdown begins. Selecting the word in this field displays the Cancel Cond menu,which enables you to invoke the cancellation condition you want.

The Cancel Cond Menu contains the following selections:

Sequential™ Intersection™ Parameters


Selection FunctionOff Selection No condition.H>C Selection A subsequent high which exceeds the highest close of the Setup

period. For short setup, reverse the condition.C>C Selection A subsequent close which exceeds the highest close of the Setup

period. For short setup, reverse the condition.H>H Selection A subsequent high which exceeds the highest high of the Setup

period. For short setup, reverse the condition.C>H Selection A subsequent close which exceeds the highest high of the Setup

period. For short setup, reverse the condition.

Intersection™ Parameters

Once the Setup has been completed and Intersection has occurred, the Countdownphase begins.

The Buy Countdown requires a series of 13 bar closes less than or equal to the low 2bars earlier—Note: the 13 count need not be consecutive. The Buy Countdownappears below the respective bars in red numbers from 1 to 13.

The Sell Countdown requires a series of 13 bar closes greater than or equal to thehigh 2 bars earlier—Note the 13 count need not be consecutive. The Sell

Sequential™ Intersection™ Parameters


Countdown appears on the chart above the respective bars in red numbers from 1 to13.

Sequential™ Countdown™ Parameters


Parameter FunctionLength Parameter Indicates the bar that commences the search for

Intersection. The default is 8, or the eighth bar back.Period Parameter Indicates whether the search for Intersection occurs during

or after Setup. The default is 3, and since the default forSetup is 4, default conditions mean that Intersection occursduring Setup.

Continue Parameter Determines whether to continue the search for Intersectionwhen Setup is canceled by a user qualification. The defaultis On. Selecting the word in this field displays the Statusmenu, which enables you to change this setting.

Countdown™ Parameters

Once the Setup has been completed and Intersection has occurred, the Countdownphase begins.

The Countdown to identify a low risk zone requires a series of 13 bar closes less than(or equal) to the low 2 bars earlier. Note: the 13 count need not be consecutive. TheCountdown to identify a low risk zone appears below the respective bars in rednumbers from 1 to 13.



The Countdown to identify a high risk zone requires a series of 13 bar closes greaterthan (or equal to) the high 2 bars earlier. Note the 13 count need not be consecutive.The Countdown to identify a high risk zone appears on the chart above the respectivebars in red numbers from 1 to 13.

During the Countdown, should the market complete another Setup, the Countdownprocess may have to begin again. This is called “Recycle.”



Parameter FunctionStatus Parameter Determines whether countdown is on or off. Default is On.

Selecting the value in this field displays the Status menu,which enables you to change this setting.

Length Parameter Indicates the total number of bars in the Countdown period.Default is 13.

Period Parameter Indicates the number of days that the Countdown looksback. Default is 2.

Price Parameter Indicates the specific reference price used to compare withthe low or high 2 bars earlier. Default is Close. Selectingthe word in this field displays the Price menu, whichenables you to change the reference price.

Equality Parameter Set to On, comparisons are made using the greater-than-or-equal-to and less-than-or-equal-to operators (closes equal tothe reference bar’s low or high are excluded). Set to Off,comparisons are made using the greater-than and less-thanoperators (closes equal to the reference bar’s low or highare included). The default is On. Selecting the word in thisfield displays the Status menu, which enables you tochange this setting.

Continue Parameter Determines whether to continue the countdown when Setupis canceled by a user qualification. The default is Off.Selecting the word in this field displays the Status menu,which enables you to change this setting.

Color Parameter Indicates the color in which Countdown labels aredisplayed. Default is Green. Selecting the word in thisfield displays the Color menu, which enables you to choosean alternative color.

Sequential™ Recycle Parameters


Recycle Parameters

Recycle has but one parameter, Status. By default, Recycle is set to B/On/After, or“Before, On, or After.” Selecting the word in this field displays the Recycle, whichenables you to choose a particular behavior for the Recycle.

The Recycle menu contains the following selections:

Sequential™ Qualifying Sequential


Selection FunctionNo Selection No recycle.Before Selection Indicates that Recycle will only occur before the

Countdown is complete.Before/On Selection Indicates that Countdown will restart only if Recycle

occurs before or on Countdown completion.B/On/After Selection Indicates that Countdown will restart before or on or after

Countdown is complete.

Qualifying SequentialThe Qualifiers allow the user to perfect the relationships between Setup and/or theCountdown bars. For example, to set the 13th Countdown bar less than or equal tothe 10th Countdown bar, Qualifier #1 should read as follows:

Qual Qval Qtype Equal With Wval Wtyp13 close CD yes 10 close CD

Another example is as follows: the 10th Countdown bar is less than or equal to the8th bar of the Setup.

Qual Qval Qtype Equal With Wval Wtyp10 close CD yes 8 close SU

You may select up to 15 various relationships and parameters.

This study identifies bar pattern sequences for the Sequential indicator. The displayis a series of numbers drawn above or below the high or low of each bar that is partof the pattern. (No values are presented in the Aspen cursor window by this study.)

Two patterns are recognized: a low risk setup and a high risk setup. Countdownsthat identify low risk zones appear below the bars, and Countdowns that identifyhigh risk zones appear above the bars. Each pattern consists of two parts, Setup andCountdown. In each part, bars are numbered from 1, but different colors may beused to distinguish the two parts.

A low risk Setup consists of X consecutive bars with:

[ ]Price price K bars before<

A high risk Setup consists of Y consecutive bars with:



Price > Price[K bars ago]

X and Y are parameters, typically 9 and 4 respectively. The default is the close ofeach bar, but other prices can be selected. Typically, Aspen price selections such asOpen, High, Low, Close, Mid-Point ((H+L)/2), Avg ((H+L+C)/3), Average tick (thelatter is only available on tick bars) can be substituted.

Setup must begin after a bar for which the price condition does NOT hold.

Once a Setup pattern is recognized, it must be qualified by an Intersection before theCountdown phase can begin. For a low risk Setup, Intersection occurs once a barappears whose high is greater than or equal to the low of any bar three or more barsearlier (but not earlier than the beginning of the Setup pattern). Conversely, for ahigh risk Setup, Intersection occurs once a bar whose low is less than or equal to thehigh of any bar three or more bars earlier (but not earlier than the beginning of theSetup pattern). The three-bar minimum distance is fixed, not “parameterized”, andhighs and lows are tested as specified regardless of the price selector. The search forIntersection bar begins with the M’th bar of the Setup (parameter M is 8 by default,but can be as little as 4 or as large as the Setup length). Search for Intersectionnormally continues beyond the end of the Setup pattern, but can optionally bestopped at the end of the Setup.

When and if Setup and Intersection occur, the Countdown phase begins with the lastbar of the Setup (or with the Intersection bar, whichever is later). Countdownsearches for and numbers bars satisfying this condition.

For a low risk Countdown:

[ ]price low j< bars before

For a high risk Countdown:

[ ]price high j> bars before

After a Setup is complete, the Setup/ Countdown sequence is canceled by any of thefollowing conditions:

1. Completion of the opposing Setup pattern (whether qualified by anIntersection or not)

2. For a low risk Setup, any of the following conditions:



a. High price subsequent to Setup > highest close of any Setupbar.

b. Close price subsequent to Setup> highest close of any Setupbar.

c. High price subsequent to Setup > highest high of any Setupbar.

d. Close price subsequent to Setup > highest high of any Setupbar (default)

For a high risk Setup, these conditions are written as:

a. Low price subsequent to Setup < lowest close of any Setupbar.

b. Close price subsequent to Setup < lowest close of any Setupbar

c. Low price subsequent to Setup < lowest low of any Setupbar.

d. Close price subsequent to Setup < lowest low of any Setupbar. (default)

Testing of conditions 2a-2d can be enabled and disabled by four parameter flags, butcondition 1 is always tested. After a cancellation occurs a new Setup must beformed to restart the pattern.

Although an opposing Setup always cancels the Intersection search and Countdownphase, a new Setup in the same direction need not. A new Setup completing while aCountdown of the same direction is active either “recycles” the Countdown (causingbar numbering to begin anew) or is ignored completely. In the latter case, only anopposing Setup can reset the pattern. A study parameter selects whether a new Setupwill recycle an active Countdown of the same direction. The Countdown is recycledif the new Setup completes:

1. strictly before the Countdown completes (reaches its specifiedlength)

2. on or before the Countdown’ completion3. at any time on, before, or after Countdown completion (default)4. only after Countdown completion.

Otherwise the new Setup is ignored (and not drawn on the chart). Note that if aSetup does recycle a Countdown, some of the Setup bars may also be pre-recycledCountdown bars, and so may require two labels.



A list of additional qualification conditions can be applied. Each qualifier is anadditional condition needed to recognize a Setup or Countdown bar. (Note thatfailure of a Setup-bar qualifier invalidates the whole Setup, whereas failure of aCountdown-bar qualifier merely postpones the Countdown.) Each qualifier list entryis of the form:

Price of the J' th bar of Setup / count < Price ofK' th bar of setup / countwhere each of the underlined items is independent. This condition restrictsrecognition of the left-hand bar; the bar named on the right-hand side must be earlierin the sequence.

Note that only a complete Setup is labeled on the chart, so there will always beexactly 9 (or more generally N) consecutive Setup labels. Countdown bars, however,are numbered as encountered regardless of whether the Countdown is latercompleted.

The command keyword for Sequential is .TDSEQUENTIAL.

TD Gap Qualifying Sequential


TD Gap TD Gap illustrates both Gaps and Laps. Gaps occur when either a bar’s high fails tointersect the previous bar’s low or a bar’s low fails to intersect a previous bar’s high.Laps occur when a high or low does intersect the previous bar’s high or low, but notthe close. Gaps and Laps are represented by a “g” for gap and an “l” for laps. If theGap or Lap occurs on a designated day, a “+” is displayed beside the alpha character.For an up gap or lap, capital letters, “G” and “L” respectively, appear once the closeof bar 8, 9, 10, or 11, after the gap bar, is greater than all closes of all bars since theGap or Lap bar.

The reverse logic is used for a down Gap or Lap.

For further information on TD Gap, please refer to Thomas R. DeMark, The NewScience of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 8,Gaps.

TD Gap TD Gap Parameters


TD Gap Parameters

This study marks gap and lap bars. The display is simply small labels drawn aboveor below some bars. (No values are presented in Aspen cursor window by thisstudy.) (NB: “gap bar” for this discussion is different from the usual Aspen meaningof “gap bar.”)

An up gap bar has a low price strictly greater than the prior bar’s high; a down gapbar has a high price strictly less than the prior bar’s low. An up lap bar has a lowprice strictly greater than the prior bar’s close, but not greater than the prior high (sothat it is not a gap bar). Similarly, a down lap bar has a high price strictly less thanthe prior bar’s close, but not less than the prior low. Thus every bar is in at most oneof these four categories.

Up gaps are marked with a “g” or “G” appearing below the gap bar’s low; downgaps are market with “g” or “G” appearing above the gap bar’s high. For additionalemphasis, different colors are used for up and down labels. Lap bars are market inthe same way, but using “l” or “L.”

A “+” is added to the label if the bar is a daily bar occurring on a specified day of theweek (no “+” signs appear if the timebase is not daily). For example, our researchsuggests that Monday gaps or laps are pre-meditated and less emotional.Consequently, their appearance conveys more significance than other days ofthe week.

A gap or lap label is upper case (“G” or “L”) if at least one bar occurring from M toN bars (inclusive) after the gap/lap bar has a Price strictly greater than (for up gaps)or less than (for down gaps) the price of all prior bars back to and including thegap/lap bar. The parameters M and N, as well as the tested price, are user-selectable.Lower case is shown if there are enough subsequent bars available to make thisdetermination.

Gap bars (in the Aspen sense) are ignored by this study: a bar is always compared tothe prior non-gap bar to determine if it is a gap/lap bar, and Aspen gap bars areignored in counting forward to determine upper or lower case labeling.

The study command for TD Gap is .TDGAP.



Field FunctionDescription Field Lists the elements in the Gap and Lap Bars study:

Down GapsUp Gaps

Start Field Specifies gap count. If a price is above the specified bars’price for a buy (less than for a sell), capital “G” or “L” replacelower case “g” or “l”.

End Field Specifies lap count. If a price is above the specified bars’closes for a buy (less than for a sell), capital “G” or “L”replace lower case “g” or “l”.

Day Field Specifies the day on which a “+” will be displayed if a gap/lapoccurs. Default is Monday. Selecting the word in this fielddisplays the + Day menu, which enables you to choose analternative week day. The + Day menu contains the followingselections:

Choosing a selection sets the respective day in the + Dayfield.

Price Field Specifies the price used to determine upper case conditions.The default is Close. Selecting the word in this field displaysthe Price menu, which enables you to choose an alternativeprice.

Color Field Indicates the colors in which gap and lap bar labels arerendered. Default for down gaps is green; default for up gapsis red. Selecting a word in this field displays the Color menu,which enables you to choose an alternative color for therespective element.



Price Menu The Price menu contains the following selections:

Daily Range Projections™ Daily Range Projections™ Parameters


Daily Range Projections™The Daily Range Projections study forecasts the projected range for the ensuing bar.The user has a choice of displaying all range projections historically or only thecurrent and next bars.

For further information on Range Projection, please refer to Thomas R. DeMark, TheNew Science of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 9,Daily Range Projections.

Daily Range Projections™ Parameters



This study draws projected high and low values for the next bar of a series. A shorthorizontal line is drawn at the projected high and low for a bar position. SinceAspen normally aligns charts with the current bar at the far right, the default chartposition will need to shift left a bar or so when this study is active.

The only visible user option is whether to compute and draw projected value for allbars visible in the chart window, or only for the current and next bars.

The projections for a bar are based on only the immediately preceding non-gap bar.The procedure is as follows:

If close < open:

( )X High Low Close Low= + + +2

If close > open:


If close = open:


Then compute:Projected high = X-LowProjected low = X-High

The study command for Daily Range Projections is .TDRP.

Study parameters include:

Field FunctionDescription Field Lists the elements of the Range Projection study:

TopBottom

All Bars Field Indicates whether projections are drawn before the currentbar. The default is Off, which means that projections are notdrawn before the current bar. Selecting the word in this fielddisplays the Status menu, which enables you to change this



setting.Color Field Indicates the color in which the respective study element is

rendered. The default for the Top of the Range Projection isGreen; the default for the bottom is Red. Selecting a word inthis field displays the Color menu, which enables you tochoose alternative colors for the respective element.

Rate of Change Studies Rate of Change


Rate of Change StudiesRate of Change studies incorporate market timing and market sentiment. For furtherinformation on Rate of Change, please refer to Thomas S. DeMark, The New Scienceof Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 10, Rate ofChange.

Studies:

Rate of ChangeTD PressureTD Pressure RatioTD Pressure Change

Rate of ChangeThe Rate of Change study identifies overbought/oversold conditions by simplycomparing current price activity to some period earlier.



The study command for ROC is .TDROC.

Rate of Change Parameters

This study draws a graph of rate-of-change values, which fluctuate around 1.0.Optionally, dotted reference lines can be drawn at user-set values, but these lines donot affect the calculation or display of the ROC line itself.

The basic ROC calculation at any given bar is:



[ ]price

price K bars ago

where the price examined is selectable (default is close), as is the distance K. Thefinal study value is an N-bar moving average of this value.

ROC outputs a gap at any gap bar, but gap bars are ignored in counting back fromnon-gap bar.

Field FunctionDescription Field Lists the study elements in the Rate of Change Indicator:

TD ROCRef ARef B

Status Field Determines whether the reference lines (Ref A and Ref B) aredrawn. Default is On, or drawn. Selecting the word in thisfield displays the Status menu, which enables you to changethis setting.

Avg. Type Field Identifies the moving average calculation used by the study.The default is Simple. Selecting the word in this fielddisplays the Avg. Type menu, which enables you to choose analternative moving average calculation.

Period Field Specifies the number of periods used to calculate the movingaverage. Default is 1, or one bar. Selecting the number in thisfield enables you to change this setting.

Compare Field Identifies the comparison distance (in bars). The default is 12.Selecting the number in this field enables you to change thissetting.

Ref Field Identifies the band parameter for overbought/oversoldconditions as shown by the reference lines (Ref A and Ref B).The default for Ref A is 102.5. The default for Ref B is 97.5.Selecting the number in this field enables you to change thissetting.

Price Field Specifies the price level used for comparison. Default isClose. Selecting the word in this field displays the Pricemenu, which enables you to change this setting.

Color Field Specifies the color of the different study elements. Default forthe TD ROC line is Green; default for the reference lines (RefA and Ref B) is Gray. Selecting any word in this fielddisplays the Color menu, which enables you to change thecolor of the respective study element.

Graph Field Specifies the rendering methods of the different study

Rate of Change Studies TD Pressure Index


elements. Default for the TD ROC line is Line; default for thereference lines (Ref A and Ref B) is Dotted. Selecting anyword in this field displays the Graph menu, which enables youto change the rendering method of the respective studyelement.

TD Pressure IndexTD Pressure measures the degree of accumulation (buying) and of distribution(selling). TD Pressure is represented by a line or histogram displaying thecumulative index of buying and selling, The formula combines price activity andvolume and their relationship with the previous bar’s open, high, low, and close.

The study command for Pressure is .TDPRS.

For further information on TD Pressure, please refer to Thomas R. DeMark, The New Science of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter 5, Accumulation Distribution.



TD Pressure Parameters

This study draws a graph of accumulation/distribution pressure. Optionally, dottedreference lines can be drawn at user-set values, but these lines do not affect thecalculation or display of the TDPRS line itself.

At each bar, TDPRS computes a price ratio and then optionally multiplies this by thevolume. Several different price ratios are available:

( )( ) ( )Close OpenHigh Low Default−

−

( )( )

Close Prior_ Closehigh Low

−−

Close - Open

Close - Prior_Close

Different calculation is applied of the opening price is more than a thresholdpercentage away from the prior close. If Open is more than P% greater than the priorclose, then instead compute:

( ) ( )( )( )

Close Prior_ Close Close LowHigh Prior_ Close

− + −−

In either case, the result is optionally multiplied by volume.

TDPRS outputs a gap at any gap bar, but gap bars are ignored in looking back to findthe prior close value.

Field FunctionPrice Parameter This selection allows the user to select one of four



methods to measure accumulation/distribution. Thedefault is the quotient of current bar close minus theprevious bar close divided by the high of the current barless the current bar low. Other options are available in thePrice Ratio menu.

The (C-O)/(H-L) selection activates the quotient of currentbar close minus the previous bar close divided by the highof the current bar less the current bar low. The C-PCselection activates the difference of the close of the currentbar less the close of the previous bar. The C-O selectionactivates the difference of the close of the current bar lessthe open of the current bar. The (C-PC)/(H-L) selectionactivates the quotient of the current bar less the close ofthe previous bar divided by the high of the current bar lessthe low of the current bar.

Vol Rule Parameter Identifies the Volume Rule employed in the calculation ofthe study. The default is the quotient of current bar closeminus the previous bar close divided by the high of thecurrent bar less the current bar low. Selecting the word inthis field displays the Volume Rule menu, which enablesyou to change the volume rule:

Threshold Parameter Specifies the adjustment to the calculation; compensatesfor significant opening price gaps using the specifiedpercentage. Default is 8.0.

Color Parameter Indicates the color used to render the study. The default is

Rate of Change Studies TD Pressure Ratio


Green. Selecting the word in this field displays the Colormenu.

Graph Parameter Indicates the rendering method for the study. The defaultis Line. Selecting the word in this field displays the Graphmenu.

TD Pressure RatioThe formulas are the same as the Pressure Index formulas; however, the period ofcalculation is not cumulative, but rather for a specified period. The rate of change ofthe current value versus X day’s ago is plotted on the chart.



TD Pressure Ratio Parameters

Field FunctionDescription Field Lists the elements in the TD Pressure Ratio study:

PressureRef ARef B

Status Field Determines whether the reference lines (Ref A and Ref B) aredisplayed. The default is on. Selecting the word in this fielddisplays the Status menu, which enables you to change thissetting.

Avg. Type Field Identifies the moving average calculation used by the TDPressure Ratio study. The default is Simple. Selecting theword in this field displays the Avg. Type menu, which enablesyou to change the moving average calculation.

Period Field Specifies the bar used for comparison. The default is 55, orthe 55th bar back. Selecting the number in this field enablesyou to change the comparison bar.

Price Field This selection allows the user to select one of four methods tomeasure accumulation/distribution. The default is thequotient of current bar close minus the previous bar closedivided by the high of the current bar less the current bar low.Other options are available in the Price Ratio menu.

Vol Rule Field Identifies the Volume Rule employed in the calculation of thestudy. The default is the quotient of current bar close minusthe previous bar close divided by the high of the current barless the current bar low. Selecting the word in this fielddisplays the Volume Rule menu, which enables you to changethe volume rule.

Threshold Field Specifies the adjustment to the calculation; compensates forsignificant opening price gaps using the specified percentage.Default is 8.0.

Ref Field Defines the overbought/oversold levels that are indicated bythe reference lines (Ref A and Ref B). By default, theoverbought level is 72%, and the oversold level is 28%.



Selecting either of the percentages in this field enables you tochange the overbought and oversold band parameters.

Graph Field Identifies the rendering method used for each study element.The default for the Pressure line is Line; the default for bothreference lines (Ref A and Ref B) is Dotted. Selecting any ofthe words in this field displays the Graph menu, whichenables you to change the rendering method used for therespective study element.

Color Field Indicates the color used to render the respective studyelement. The default for the Pressure line is Green; thedefault for the reference lines (Ref A and Ref B) is Gray.Selecting the word in this field displays the Color menu,which enables you to change the color of the respective studyelement.

TD Pressure ChangeThis study computes rate of change of pressure.

The options and calculations are exactly like TDPRS, except that the final result is:



[ ]TDPRS

TDPRS K bars ago

The study command for Pressure Change is .TDPRC.



TD Pressure Change Parameters

Field FunctionAvg. Type Field Identifies the moving average calculation used by the TD

Pressure Change study. The default is Simple. Selecting theword in this field displays the Avg. Type menu, which enablesyou to change the moving average calculation.

Period Field Specifies the bar used for comparison. The default is 55, or the55th bar back. Selecting the number in this field enables you tochange the comparison bar.

Compare Field Specifies the bar used for comparison. Default is 8, or the 8thbar back. Selecting the number in this field enables you tochange the comparison bar.

Price Field This selection allows the user to select one of four methods tomeasure accumulation/distribution. The default is the quotientof current bar close minus the previous bar close divided by thehigh of the current bar less the current bar low. Other optionsare available in the Price Ratio menu.

Vol Rule Field Identifies the Volume Rule employed in the calculation of thestudy. The default is the quotient of current bar close minusthe previous bar close divided by the high of the current barless the current bar low. Selecting the word in this fielddisplays the Volume Rule menu, which enables you to changethe volume rule.

Threshold Field Specifies the adjustment to the calculation; compensates forsignificant opening price gaps using the specified percentage.Default is 8.0.

Color Field Indicates the color used to render the study. The default isGreen. Selecting the word in this field displays the Colormenu.

Graph Field Identifies the rendering method used for the study line. Thedefault is Line. Selecting the word in this field displays theGraph menu, which enables you to change the renderingmethod used for the study.

Waldo Patterns TD Pressure Ratio


Waldo PatternsFor further information on Waldo Patterns, please refer to Thomas S. DeMark, TheNew Science of Technical Analysis, New York: John Wiley & Sons, 1994, Chapter13, “Waldo” Patterns.

In Aspen, Waldo patterns are color rules that are available by subscription.

Index


Index

..TDARC • 18.TDCH1 • 52.TDCH2 • 55.TDDMI • 37.TDFACTOR • 16.TDGAP • 77.TDLINE • 5.TDMA1 • 47.TDMA2 • 50.TDPRC • 92.TDPRS • 86.TDREBO • 31.TDREI • 21, 27.TDROC • 84.TDRP • 81.TDSEQUENTIAL • 60.TDWAVE • 40

Aaccumulation distribution • 86anchor points • 10, 18, 19, 21, 23, 25

Ccontratrend • 60conventions used in this guide • ivcopyrights • iCountdown™ • i

DDaily Range Projections™ • i, 80, 81demand • 4, 7, 8, 11, 36DeMarker Indicator™ • i, 36, 38distribution, • 86D-Wave™ • 39, 41

Eentry

high risk • 60low risk • 60

FFibonnaci retracements • 20, 39

Ggap bar • 38, 76, 85, 87

IIntersection™ • i

Llap bar • 76, 77

Mmenus • v, 1, 2, 3, 11, 18, 21, 25, 28, 29, 30, 33, 42,

43, 49, 51, 53, 54, 56, 57, 58, 59, 61, 62, 64, 65, 68,70, 71, 78, 79, 81, 82, 85, 87, 88, 89, 90, 91, 93+ Day • 78Avg. Type • 29Cancel Cond • 65Color • 30DeMark Trendlines • 3, 17, 19, 23DeMark Trendllines • 2DeMarker Indicator parameters • 38D-Wave parameters • 41Gap and Lap Bars parameters • 77Graph • 30Price • 33, 43, 49, 61, 79Price Ratio • 87Range • 33

Index


Range Expansion Breakout • 32Range Expansion Index parameters • 28Range Projection parameters • 81Rate of Change Indicator parameters • 84Recycle • 71Rel • 62Section • 61Select • 11Select DeMark Study • 1

Add a Study toggle • 1Status • 11, 28TD Channel 1 • 53TD Channel 2 • 56TD Channel 3 • 58TD Line parameters • 11TD MA1 parameters • 48TD MA2 parameters • 50TD Pressure Change parameters • 93TD Pressure Index parameters • 87TD Pressure Ratio parameters • 90TD Sequential parameters • 63, 65, 66, 68, 71Trend Line Function • 2Trend Line Functions • 2Up/Down • 42Volume Rule • 88

moving averages • 46

Nnon-gap bar • 31

Pparameters • 8, 11, 28, 29, 38, 61, 64, 65, 68, 70, 71,

85, 87, 88, 89Points, TD • 5Preface • iv

Qqualifying TD Lines™ • 5

RRange Expansion Breakout • 30, 32Range Expansion Index™ (REI) • i, 27, 28, 29Rate of Change • 83, 84

Recycle • 71retracements • 2, 3, 18

SSequential™ • i, 60, 61, 64, 72Setup™ • i, 60, 62, 63, 64, 65, 66, 68, 70, 72supply • 4, 8, 11, 36

TTD Absolute Retracement™ • 24, 26TD Breakout Qualifiers™ • iTD Demand Line™ • i, 4TD Dollar Rated Option Ratio™ • iTD Gap • 76, 77TD Line Breakout™ • i, 8TD Line Value™ • iTD Lines™ • i, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14

qualifying • 5TD Points™ • 5, 7, 8, 11TD Pressure • 86, 87TD Pressure Change • 91, 93TD Pressure Ratio • 89, 90TD Price Points™ • iTD Price Projector™ • i, 48TD Relative Retracement™ • 20, 22, 23, 24TD Retracement Arc™ • i, 18, 19TD Supply Line™ • 4TDCH I • 51, 53TDCH II • 54, 56, 58TDCH III • 57TDCH3 • 57TDMA I • 46, 48TDMA II • 50The New Science of Technical Analysis, Library of

Congress Publication Data • iitoggles • 1Tom Demark Factor study • 15Tom Demark Line study • 4, 5, 6

demand line • 4supply line • 4

Tom DeMark Points • 5Tom Demark Trend Factors study • 15trademarks

held by Thomas R. DeMark • iTrend Factors™ • i, 2, 3, 4, 15, 17, 18trend lines • 1, 2, 4, 7, 17, 18, 19, 21, 23, 24, 25, 26

Index


WWaldo Patterns • 94

Zzones

entry • 60

DeMark, FOREX, PRICE

Documents

Transcript of DeMark, FOREX, PRICE