Thomas DeMark's Approach, Part I: TD-Points and TD-Lines

Ask three experienced traders to draw a trend line on the same chart and you will often get three different lines. Thomas DeMark set out to fix that. His idea was to replace judgment with clear rules, so that anyone drawing a trend line on the same chart gets the same line. This first part of our series explains the two building blocks: TD-points and TD-lines.

Draw trend lines from right to left

Most traders draw trend lines from left to right, starting with an old high or low. DeMark reversed this. Recent prices matter more than old ones, so a TD-line is anchored on the most recent turning points and drawn from right to left. As new turning points form, the line is redrawn.

TD-points: the turning points

A TD-line connects two TD-points. There are two kinds:

• TD supply point: a bar whose high is higher than the highs of the bars right before and right after it. Downward TD-lines are drawn through supply points.
• TD demand point: a bar whose low is lower than the lows of the bars right before and right after it. Upward TD-lines are drawn through demand points.

To draw a downward TD-line, find the most recent TD supply point, then the next supply point to its left that is higher, and connect them. An upward TD-line connects the most recent TD demand point with the next lower demand point to its left (Fig. 1).

Fig. 1. TD-points and the TD-line drawn through them.

Qualifying TD-points

Not every local high or low makes a reliable anchor. DeMark added tests that a TD-point must pass to count as a “true” high or low:

1. A TD demand point’s low must be lower than the close two bars before it.
2. A TD supply point’s high must be higher than the close two bars before it.
3. For a demand point, the close of the next bar must be above the level the TD-line would reach on that bar (its rate of advance).
4. For a supply point, the close of the next bar must be below the level the TD-line would reach on that bar (its rate of decline).

Highs and lows found without these tests are “graphic” highs and lows. Those that pass are “true” highs and lows. The tests remove many TD-points and TD-lines, but the lines that remain are more reliable.

Longer-term TD-lines: magnitude

The TD-points above use three bars: the turning bar and one bar on each side. Lines drawn through them are level 1 (magnitude 1) TD-lines, which describe the short-term trend. For a longer view, DeMark used higher magnitudes:

Every higher-level TD-point is also a level 1 point, but only the two most recent level 1 points are active at any time. Higher-level TD-lines are used in the same way as level 1 lines.

Even so, DeMark advised working mainly with level 1 lines, for two reasons:

• A higher-level TD-point takes longer to confirm, so price often breaks the line before the second point forms, and the trade is missed.
• While you wait for a higher-level signal to reach its target, a lower-level line is more likely to give an opposite signal first.

Drawing the line is only half the job. In Part II we look at how DeMark judged whether a break of a TD-line is real.

Part 1 of 5 in the Thomas DeMark’s Approach series. Next: Part II: Breakout Qualifiers.

Screen for it on MarketInOut

TD-Line breakouts are built into our formula language for magnitudes 1 to 3. For example, NYSE and Nasdaq stocks that just crossed above a level 1 TD-Line:

exch(nyse,nasdaq) and type(stock) and td_ubm1

Use td_dbm1 for breaks below the line, and m2 or m3 for longer-term lines.

Rewritten in October 2026 from an article in MarketInOut’s original article library.