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Thomas DeMark's Approach - Part III - Price Projections

After determining a trend line breakout validity the trader stands in front of the problem of determining breakout's price targets, i.e., to what are the levels the price will continue to move to after the breakout.

### What is the target after the trend line breakout: the first TD-price projector

After determining a trend line breakout validity the trader stands in front of the problem of determining breakout's price targets, i.e., to what are the levels the price will continue to move to after the breakout.

There are three methods for calculating the price projections after the true trend line breakout. They are called TD-Price Projectors (Fig. 1).

TD-Price Projector 1 has the lowest accuracy, but easy to calculate:

In the case of upward breakout price projector 1 is calculated as follows: the distance from the lowest price below the TD-line to a price point on the TD-line directly above it is added to the price at the point of TD-line breakout.

In the case of downward breakout price projector 1 is calculated as follows: the distance from the highest price above the TD-line to a price point on the TD-line directly under it shall be deducted from the price at the point of TD-line breakout.

Fig. 1. Price projections show Demark's guidance of price movement after a trend line breakout

### What is the target after the trend line breakout: the second TD-price projector

TD-Price Projector 2 is calculated by analogy with the first, but not the lowest price is chosen in case of upward breakout (the highest price in case of downward breakout), but the lowest (highest) price of under (above) TD-line at the bar with the lowest (highest) closing price. Then, this value is added to the price of a breakout in the case of upward breakout and deducted in case of downward breakout. Very often price projector 1 and price projector 2 coincide.

Fig. 1. Price projections show Demark's guidance of price movement after a trend line breakout

### What is the target after the trend line breakout: the third TD-price projector

TD-price projector 3 is the most conservative:

At the upward (downward) TD-line breakout the projection is calculated as the difference between the TD-line and the closing price below it (above it) at the bar when the lowest (highest) value of the price has been registered.

Fig. 1. Price projections show Demark's guidance of price movement after a trend line breakout

Sometimes the price projections are not met. It happens usually as a result of the following two events:

• A new signal occurred as a result of an oppositely directed TD-line breakout. In this case, the old signal is replaced with a new one, and price targets are canceled.

• TD-line breakout signal was false. Usually this becomes clear when the next bar after the breakout closes below (above) the downward (upward) TD-line.

 Backtest
Criterion
 Stop Loss, % Take Profit, %

 Symbol (e.g. MSFT, EURUSD, SILVER) Signal ----------TRENDS---------- Bullish Trend Last 200 Days Bullish Trend Last 50 Days ----------TREND LINES---------- Price Crossed Above Resistance Line Price Crossed Above Falling Trendline Price Touched Rising Trendline Price Touched Support Line ----------NEW HIGHS/LOWS---------- New 52-Week High New 26-Week High New 13-Week High ----------FIBONACCI LEVELS---------- Price Touched 0.23 Fibonacci Price Touched 0.38 Fibonacci Price Touched 0.50 Fibonacci Price Touched 0.23 Fibonacci and Reversed Price Touched 0.38 Fibonacci and Reversed Price Touched 0.50 Fibonacci and Reversed ----------MA VS PRICE CROSSOVERS---------- Price Crossed Above MA(200) Price Crossed Above MA(50) Price Crossed Above MA(26) Price Above MA(200) Price Above MA(50) Price Above MA(26) ----------EMA CROSSOVERS---------- EMA(50) Crossed Above EMA(200) EMA(26) Crossed Above EMA(200) EMA(26) Crossed Above EMA(50) EMA(13) Crossed Above EMA(200) EMA(13) Crossed Above EMA(50) EMA(7) Crossed Above EMA(50) ----------MACD HISTOGRAM---------- MACD Histogram(12,26,9) Bullish Divergence MACD Histogram(12,26,9) Crossed Above Zero MACD Histogram(12,26,9) Above Zero Line MACD Histogram(12,26,9) Below Zero Line ----------RELATIVE STRENGTH INDEX---------- RSI(14) Bullish Divergence RSI(14) Crossed Above 70 RSI(14) Crossed Above 50 RSI(14) Crossed Above 30 RSI(14) Trending Up Last 7 Days RSI(14) Trending Up Last 13 Days RSI(14) Trending Up Last 26 Days RSI(14) Between 70 and 100 RSI(14) Between 0 and 30 ----------BOLLINGER BANDS---------- BB(20, 2) Upper Band Touched BB(20, 2) Upper Band Penetrated BB(20, 2) Lower Band Touched BB(20, 2) Lower Band Penetrated ----------EMA ENVELOPE---------- EMA Envelope (200, 25) UC Touched EMA Envelope (50, 15) UC Touched EMA Envelope (26, 10) UC Touched ----------CHANNELS---------- Price in +/- 1.5% Channel Last Week Price in +/- 3% Channel Last 2 Weeks Price in +/- 5% Channel Last Month Price in +/- 10% Channel Last 6 Months ----------GAPS---------- Gap Up Greater Than 20% Gap Up Greater Than 10% Gap Up Greater Than 5% ----------CANDLESTICKS---------- Long White Line Hammer Piercing Line Bullish Engulfing Lines Morning Star ----------DEMARK'S APPROACHES---------- TD-Line Breakout TD-Line Breakout, Qualifier 1 is Met TD-Line Breakout, Qualifier 3 is Met TD-Line Breakout, Qualifier 2 is Met ----------ON BALANCE VOLUME---------- OBV vs Price, Divergence in Last 50 Days OBV Bullish Trend in Last 200 Days ----------VOLUME TRENDS---------- Rising On Unusual Volume Falling On Unusual Volume Volume Trending Up During Last 26 Days Volume Trending Up During Last 13 Days Volume Trending Up During Last 7 Days

 Technical Analyzer
 Symbol Display Renko PnF Kagi Support & Resistance Trendlines Tirone Levels Quadrant Lines Balance Step Zig Zag 4% Method Gann Turn Price Speed Resistance Lines Fibonacci Retracements Fibonacci Fans Fibonacci Time Zones Fibonacci Cycles

 Stock Screener
 Criterion ----------TRENDS---------- Bullish Trend Last 200 Days Bullish Trend Last 50 Days ----------TREND LINES---------- Price Crossed Above Resistance Line Price Crossed Above Falling Trendline Price Touched Rising Trendline Price Touched Support Line ----------NEW HIGHS/LOWS---------- New 52-Week High New 26-Week High New 13-Week High ----------FIBONACCI LEVELS---------- Price Touched 0.23 Fibonacci Price Touched 0.38 Fibonacci Price Touched 0.50 Fibonacci Price Touched 0.23 Fibonacci and Reversed Price Touched 0.38 Fibonacci and Reversed Price Touched 0.50 Fibonacci and Reversed ----------MA VS PRICE CROSSOVERS---------- Price Crossed Above MA(200) Price Crossed Above MA(50) Price Crossed Above MA(26) Price Above MA(200) Price Above MA(50) Price Above MA(26) ----------EMA CROSSOVERS---------- EMA(50) Crossed Above EMA(200) EMA(26) Crossed Above EMA(200) EMA(26) Crossed Above EMA(50) EMA(13) Crossed Above EMA(200) EMA(13) Crossed Above EMA(50) EMA(7) Crossed Above EMA(50) ----------MACD HISTOGRAM---------- MACD Histogram(12,26,9) Bullish Divergence MACD Histogram(12,26,9) Crossed Above Zero MACD Histogram(12,26,9) Above Zero Line MACD Histogram(12,26,9) Below Zero Line ----------RELATIVE STRENGTH INDEX---------- RSI(14) Bullish Divergence RSI(14) Crossed Above 70 RSI(14) Crossed Above 50 RSI(14) Crossed Above 30 RSI(14) Trending Up Last 7 Days RSI(14) Trending Up Last 13 Days RSI(14) Trending Up Last 26 Days RSI(14) Between 70 and 100 RSI(14) Between 0 and 30 ----------BOLLINGER BANDS---------- BB(20, 2) Upper Band Touched BB(20, 2) Upper Band Penetrated BB(20, 2) Lower Band Touched BB(20, 2) Lower Band Penetrated ----------EMA ENVELOPE---------- EMA Envelope (200, 25) UC Touched EMA Envelope (50, 15) UC Touched EMA Envelope (26, 10) UC Touched ----------CHANNELS---------- Price in +/- 1.5% Channel Last Week Price in +/- 3% Channel Last 2 Weeks Price in +/- 5% Channel Last Month Price in +/- 10% Channel Last 6 Months ----------GAPS---------- Gap Up Greater Than 20% Gap Up Greater Than 10% Gap Up Greater Than 5% ----------CANDLESTICKS---------- Long White Line Hammer Piercing Line Bullish Engulfing Lines Morning Star ----------DEMARK'S APPROACHES---------- TD-Line Breakout TD-Line Breakout, Qualifier 1 is Met TD-Line Breakout, Qualifier 3 is Met TD-Line Breakout, Qualifier 2 is Met ----------ON BALANCE VOLUME---------- OBV vs Price, Divergence in Last 50 Days OBV Bullish Trend in Last 200 Days ----------VOLUME TRENDS---------- Rising On Unusual Volume Falling On Unusual Volume Volume Trending Up During Last 26 Days Volume Trending Up During Last 13 Days Volume Trending Up During Last 7 Days