Using TD Sequential Counts to Highlight Potential Trend Exhaustion

Summary

This indicator presents Tom DeMark Sequential counts from 1 to 13 as candle colors and labels. The count advances when a close is below the close four bars earlier for one direction, or above it for the other, and resets when that condition fails. Counts 9 and 13 are highlighted as possible exhaustion or reversal points; labels are described for counts 7 through 13. Users can adjust the display, colors, and timeframe, and the document suggests pairing the indicator with a pressure ratio.

The author recommends using the signal for short-term reversals, while also mentioning an example on a daily LUNA chart and compatibility with Heikin Ashi candles. No systematic backtest or quantified evidence is provided. Sequential exhaustion counts indicate a possible setup rather than confirm a reversal, so the visual cues alone do not establish an entry, exit, or risk rule. The included code also contains trading-entry logic on count 13, although the description primarily frames the item as an indicator.

Key ideas

• The indicator counts consecutive closes relative to the close four bars earlier, resetting when the comparison condition fails.
• It displays sequence progress through candle colors and labels, emphasizing counts 9 and 13 as possible exhaustion points.
• The author presents it mainly as a short-term reversal aid and suggests combining it with a pressure ratio.
• The document provides no quantified evidence that the highlighted counts reliably predict reversals.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.