Thomas DeMark's Approach  Part I  Pivot Points and TDLines
The main merit of Thomas Demark was that he attempted to formalize many of the techniques of technical analysis, which are very difficult to describe in mathematical language, i.e. show a clear and unambiguous algorithm.
For example, it is difficult to formalize the right choice of points in the construction of trend lines. If you asked three experienced traders to build a trend line on the same chart, often you would get three completely different outlook on the market.
To resolve this uncertainty and ambiguity in the terms, Thomas DeMark made an attempt (and quite successfully) to formalize the process of technical analysis.
How to build a trend line: TDpoints and the TDline
The concept of "trend line" is often treated ambiguously and inconsistently. Unfortunately, in most cases, the procedure of trend line drawing is subjective. Many trend lines can be built, but only one is true.
Thomas DeMark has developed a methodology of objective selection of two points to build a TDtrend line (TD  reduction from the first letters of the technique author name). Application of this method resulted to technique of trend lines graphical analysis loses its former subjectivity and becomes a purely mechanical procedure.
The first thing that one has to abandon is drawing trend line from left to right. The current price movement is more important than price dynamics for previous days, so the trend line should be plotted from right to left, so that the righthand side of the chart is the most recent data on the market's state.
Trend line drawn through these points is called TDline and the points themselves  TDpoints.
Supply price pivot point  a bar with a maximum price higher than the maximum prices of the previous and subsequent bars. Downward trend lines are drawn through the highs of such bars.
Demand price pivot points  this is a bar with a minimum price below the minimum price of the previous and subsequent bars. Upward trend lines are drawn through the minima of such bars.
To plot down the trend line, one has to reveal two TDpoints consistently from right to left and draw trend line through them (Fig. 1).
Fig. 1. Example of construction of TDline
There are criteria of truth for TDpoints:
 Demand price pivot point should be lower than the closing price of the two bars before it registered.
 Supply price pivot point should be higher than the closing price of the two bars before it registered.
 For Demand price pivot point the closing price of the next bar should be higher than the calculated rate of rise of TDline (TD Line rate of advance).
 For Supply price pivot point the closing price of the next bar should be lower than the calculated rate of fall of TDline.
These criteria substantially reduce the number of TDpoints and TDlines, while significantly increasing their reliability.
Highs and lows registered without the applying of the criteria of truth TDpoints are called "graphic" highs and lows. Highs and lows registered using these criteria are called "true" highs and lows.
TDline of greater length
TDline described in the previous section, are TDlines of the first level (Level 1 magnitude). This means, to determine each TDpoints used for their construction requires three bars. TDline of the first level are of shortterm nature, but often a trader wants to analyze the longerterm development of price movements. To do this, apply TDline with a length of second, third level, etc.
TDline of the second level (Level 2 magnitude) are drawn through TDpoints, which are being formed by 5 bars: Supply price pivot point must be surrounded on each side by lower highs, while the demand price pivot point  by two higher lows.
Accordingly, for the construction of TDline of the third level (Level 3 magnitude) for the registration of each TDpoints it is necessary 7 bars and so on.
By definition, all TDpoints of higher level are also TDpoints of the lower level, but not all of them are "active" points of the first level, since only two most recent TDpoints of the first level are active.
TDline of higher level are treated the same as the TDline of the first level.
 However, T. Demark still advised to work only with TDlines of the first level:
 In the case of TDline of higher level, waiting for the last TDpoint formation increases the probability of a trend line breakout before it is formed and the opportunity to open profitable position would be missed.
 In the case of TDline of higher level, waiting for the last TDpoint formation increases the probability of an opposite signal (from lower level TDline) is formed before price target is realized.

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