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TOM DEMARK SEQUENTIAL PATTERNS Sequential is a market timing technique developed by Thomas R. DeMark. Thomas R. DeMark has been developing technical systems for the better part of 20 years. His methods have been incorporated, and used successfully, by such great traders as George Sorros and Paul Tutor Jones. He has been an advisor to such financial barons as Leon Cooperman and Lawrence Tish. Thomas R. DeMark has shaped the investment strategies at some of the largest trading houses of the world. His systems of pattern recognition blend perfectly with Japanese candlestick technical analysis. And as such, we are pleased to introduce this technique into our existing library, which will create a more dynamic and profitable outcome. This technique actuality is a unique complex pattern. This technique determines exhaustion of a current trend thereby defining a pivot or reversal point. When terse pivot points are found with a candlestick pattern the probability of success is greatly enhanced.
Sequential begins with a countdown, which will eventually reach number nine - (9). To calculate the first part of sequential ("Making a Nine"), we first compare the current day’s close to the close of sessions prior. If the current close is higher the DeMark sequential count becomes one (1). On the following cycle, that close is compared to the close of four (4) sessions ago. If the close is higher, the DeMark sequential count moves to two (2). This will continue until nine - (9) consecutive cycles are made.
If at any point, the close is not higher, the count stops and begins again. If the nine- (9) consecutive higher closes are made, this completes a pattern termed "Making a Nine". This pattern is called an "Intersection". At this point, Tom DeMark believes that one of two things will happen:
The "Countdown" is composed of comparing the current day’s close to the close of two sessions prior. This countdown does not need to be in consecutive order (day after day). Once a total of thirteen (13) closes greater than the high two days earlier occurs, a sell signal is generated. One can apply the following rules to combine the DeMark Sequential with Japanese candlestick patterns. During a defined trend, when the sequential count reaches eight (8) or nine - (9), look for bullish reversal and buy signals during a down trend or bearish reversal and sell signals during down trend. If the current trend remains intact. Look for candlestick patterns such a bullish or bearish continuation begins the sequential countdown to thirteen (13). This indicates that the trend has crossed through the "Intersection" and will continue. When the count reaches thirteen (13), one should find candlestick patterns indicating a reversal and act accordingly with great confidence.
The contained information was derived from the works of Thomas R. DeMark, His recently published book "The New Science of Technical Analysis" published by John Wiley & Sons, is a milestone achievement. We wish to personally than Tom DeMark for his input, as well as, permission to incorporate his dynamic techniques into this trading application. |
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