Previous Bar Current Bar Previous Bar Current Bar 1. First Bar of a BUY Setup A BUY Setup bar is any bar which closes LESS than the close 4 bars earlier. For a BUY Sefup to begin a ‘Price Flip’ must occur. ‘A ‘Price Flip’ occurs when the current bar closes LESS than the close 4 bars earlier and the close of the preceding bar is GREATER THAN OR EQUAL TO ‘the close 4 bars earlier. This indicates a change in the trend. Copyright ©1997 by Market Studies, Inc. All Rights Reserved. 15 2. First Bar of a SELL Setup A SELL Setup bar is any bar which closes GREATER than the close 4 bars earlier. Similar to a BUY Setup, a SELL Setup cannot begin until a ‘Price Flip’ occurs. This happens when the current bar closes GREATER than the close 4 bars earlier and the close of the preceding bar is LESS THAN OR EQUAL TO the close 4 bars earlier. Again, indicating a change in the trend. TD Sequential 1PASuperCharts by Omega Research [TD Sequential 03-04) ie Fle View Ince Format Toole Window Help ARBs On rer 4, Third bar of a SELL Setup Setup continues to qualify with the current bar (#3), Although Setup bar #2 closes LESS than the close of Setup bar #1, it still closes slightly GREATER than closing GREATER than the close 4 bars earlier. the close 4 bars earlier, thereby fulfilling the Setup 3. Second Bar of a SELL Setup requirement. Note: In order for a SELL Setup bar to qualify, the current bar needs only to be GREATER than the close 4 bars earlier (not all bars between). TD Sequential 2 Copyright ©1997 by Market Studies, Inc. All Rights Reserved,WSbeschars by Omega Research [TD Sequential 05-06] fe View Inset Famat Too Widow Heb ‘PDow Industrials Daily 5300 |} 5250 5050 6000 15 2 aleld ‘Dow Industrials Daily 5. An Example of a Complete SELL Setup ‘Above is the MINIMUM requirement for a SELL Setup. Nine consecutive closes GREATER than the close 4 bars earlier. Upon completion of a SELL Setup, a painted box will appear around the Sefup bars beginning with Serup bar #1 and extending through and including Setup bar #9, The height of this box is determined by the extreme high and extreme low of the Setup bars. Copyright ©1997 by Market Studies, ne. All Rights Reserved 6. An Example of a Complete BUY Setup Above is the MINIMUM requirement for a BUY Setup. Nine consecutive closes LESS than the close 4 bars earlier. TD Sequential 3Psuperchats by Omega Research {TD Sequential 07-09] lei Tie Yew Inet Fama Jon Wreow Heb 7.- 9. Continuation of a Setup ‘The minimum requirement for a valid Setup is 9 consecutive closes (higher or lower) than the close 4 bars earlier. However, the Serup phase may continue beyond the 9th bar, as long as each additional bar meets the qualifications of Setup Upon completion of Sefup, a painted box will appear around the Setup bars beginning with Setup bar #1 and extending through and including the last bar of Setup. The height of this box is determined by the extreme true high and extreme true low of the Setup bars. Copyright ©1997 by Market Studies, Inc.All Rights Reserved. ‘TD Sequential 4PsuneiChats by Omega Research [1D Sequenti Hie Yew IBACOFFEE 05795-Daily Insert Famat Toole Window Help 185 180 185 Mar 10912 bn bs t b 0828 107168 10. Intersection for a BUY Countdown For a BUY Countdown to begin, Intersection must take place. This requires that the HIGH of trading bar 8 of Setup (or the first subsequent bar) be GREATER than or equal to the LOW three or more trading bars earlier, up to and including the first bar of Setup. Copyright ©1997 by Market Studies, Inc. All Rights Reserved. 11. Intersection for a SELL Countdown, LL Countdown to begin, Intersection must This requires that the LOW of trading bar 8 of Setup (or the first subsequent bar) be LESS than, or equal to the HIGH three ot more trading bars earlier, up to and including the first bar of Serup. In the example above, Setup bar #8 does not intersect Setup bar #5 nor does it intersect any of the Setup bars #4 back to #1. Next, a comparison is made between Setup bar #9 and Setup bar #6 (followed by Setup bars #5 back to #1). If Intersection does not occur, the next comparison is made between the first bar after Setup bar #9 and Setup bar #7. TD Sequential 5PSupeiChauts by Owega Research [TD Sequential 1215] Fle View nat Fomat Todt Window Hep Copper High Grade 03/96-Daily ‘ 4 } (two bars back) l 1 (two bere bsck) 1 * | Srna pis PPE sa 12.-13, First Bar of a BUY Countdown A BUY Countdown is a bar that closes LESS than (or EQUAL to) the LOW 2 bars earlier. After Setup and Intersection have occurred, the Countdown process begins. In the example above, Intersection occurs with Setup bar #8 intersecting Setup bar #5 allowing Countdown bar #1 to begin on the last bar of Setup (bar #9). The close of Setup bar #9 is LESS than the LOW of Setup bar #6 allowing Countdown bar #1 to be plotted, sharing Setup bar #9, Copyright ©1997 by Market Studies, Inc. All Rights Reserved, 14.-15. First Bar of a SELL Countdown A SELL Countdown is a bar that closes GREATER than (or EQUAL to) the HIGH 2 bars eat! ¢ above example illustrates how Intersection can occur beyond Setup bar #9. The bar after Setup bar #9 intersects with Setup bar #7 allowing Countdown bar #1 to begin with the first close GREATER than the HIGH two bars earlier. TD Sequential 6Psupcithant by Daeg Research [1 Secuential 16-17] als}x1 Tie Yew set Fomst Too Window Hep ees FDL} SHE wrodota: 09796-Daily lo) xi| —_ at ae 16, Second Bar of a SELL Countdown 17. Third Bar of a SELL Countdown In the example above, Countdown bar #2 qualifies by Unlike Setup, the series of Countdown bars DO NOT closing GREATER than the HIGH two bars earlier. have to be consecutive. Notice the two bars after Countdown bar #2, both close LESS than the HIGH two bars earlier. The current bar (#3), qualifies for Countdown by closing GREATER than the HIGH ‘two bars earlier. Copyright ©1997 by Markt Sti, ne. All Rights Reserved TD Seqential 7suverchats bp Omega Research [TD Sequential 18-19} Fo ew Inet Fomst ook Window Heb pe 18. An Example of a Complete SELL Countdown Countdown is the third and final phase of TD Sequential, ‘A low risk SELL zone will exist upon the completion of the 13" bar of a SELL Countdown. However, it is important to apply other TD indicators to initiate entries Copyright ©1997 by Market Studies, Ine. All Rights Reserved MACopper High Grade 03/96-Daily 120 118 ES Feb 19. An example of a Complete BUY Countdown A low risk BUY zone will exist upon the completion of the 13" bar of a BUY Countdown. Again, it is important to apply other TD indicators to initiate entries TD Sequential 8Research [TD Sequential 20-21] 11x) Insert Fomat Tools Wedow Help Pi supcithosts by Om a Seo ond} LAE wrod 09/96 0 = 2ID}x4 dun ul 20.- 21. Using “EQUAL TO” for Comparisons If the condition of ‘EQUAL TO” is not included, Countdown bars #2, #10 and #11 would not have been. qualified, leaving the Cownidown phase three bars behind and plotting Countdown bar #10 at the low instead of #13. Copyright ©1997 by Market Studies, Ine. All Rights Reserved. TD Sequential 9SD Suvcrchants by Omegn Research [TD Sequential 2223] alsl x! Fle Von! Inet Foal Toot Wow tp PADAY T-BONDS 99/97 Daily. 112M6 109612 22.- 23. An Example of ‘Recycling’ - BEFORE the Completion of Countdown Markets may record another Setup during the Countdown phase. This additional Setup may occur 1) BEFORE the completion of Countdown, 2) On Countdown, ot 3) AFTER the completion of Countdown and prior to a ‘PRICE FLIP’. This is referred to as ‘Recycling’. When a market ‘Recycles’ it may be indicating that the trend is likely to continue. In the chart above, the initial Setup is completed and Countdown begins. Then, just prior to Countdown bar #13, an additional Setup phase is completed. The option of cancelling Countdown if an additional Setup occurs BEFORE the completion of Countdown would cancel Countdown and remove the Countdown numbers from the chart Copyright ©1997 by Market Studies, Ine. All Rights Reserved ‘TD Sequential 10Psuperthaiteip Omega Research {1 Sequential 225] lelxd Fle Yew Inst Final Joo Widow Heb OI 24,25. An Example of ‘Recycling’ - ON the Completion of Countdown Occasionally, an additional Secup will complete ON Countdown bar #13 as shown above. By electing to cancel ‘Countdown if an additional Setup completes ON the last bar of Countdown, the Countdown phase is cancelled and the numbers are removed from the chart. Copyright ©1997 by Market Studies, Ine. All Rights Reserved, TD Sequential 11BSuvcithirts by Orhega Rerearch [TD Sequential 26-27] lel le View Inset Fomot Toole Window Help ELEIST| Bi nterationa Busines Daily we lolx] Gi 26.- 27. An Example of ‘Recycling’ - AFTER the Completion of Countdown When Countdown completes, the prevailing trend is still in existence until a ‘price flip’ ocours in the opposite direction.(shown in the chart above as bar ‘a’). During the period of the prevailing trend, it’s possible for an additional Setup to occur. In the example above, an additional Setup completes AFTER the completion of Countdown and PRIOR TO the occurrence of the ‘price flip’ depicted by bar ‘a’. Copyright ©1997 by Market Studies Inc. All Rights Reserved ‘TD Sequential 12SDsunerChats by Omega Research [TD Sequential 2823} isi Fle View Inver Fomat Took Windle Help BLS BRITISH POUND 06/97-D0iy ___ ibid 16 28.- 29. An Example of ‘Recycling’ - Smaller True High to True Low If.an additional Serup completes, it may be useful to ignore the Setup AND NOT cancel the Countdown phase if the Setup is ‘Smaller’ and more compressed than the initial Serup. A ‘Smaller’ Setup is defined as one whose true range is less than the true range of the initial Serup. In the example above, the true range of the additional Setup is 55% of the true range of the initial Setup. ‘Smaller’ repetitive Setups occur as a market struggles in the direction of the prevailing trend. Often markets will reverse at the completion of a ‘Smaller’ Serup therefore it may be prudent to ignore a ‘Smaller’ Setup, not ‘recycle’, and allow Countdown to complete. copyright ©1957 hy Market Studies, ne. All Rights Reserved TD Sequeial 13,DsuperChats by Omega Research {TD Sequential 30]. il ial Te View Inset Fomat Tooke Widow Heb ‘MBAITISH POUND 03/97-Daiy aiolxd 182 160 158 he +186 b154 30. An Example of ‘Recycling’ - ‘Larger’ True High to True Low In very strong markets, it’s possible to record a Setup that encompasses far more than the minimum of 9 bars that is required for Setup. In the example above, the second Setup lasts for 6 weeks, each bar recording a close ABOVE the close 4 bars earlier. An extended Serup such as this will often record a range from true high to true low that is 200%, 300% or even 500% larger than the initial Serup. In the example above, the Setup shown in the middle of the chart is 383% larger than the initial Serup. Ifa ‘Larger’ Setup occurs, it may be indicative of a “blow off top’ (or a ‘panic bottom’) and the market may react violently in the opposite direction. The March 1997 British Pound retraced 50% of the 6 week move in just 3 trading days. Notice that after the 50% pull back, the market resumed its trend and recorded a ‘Smaller’ Setup resulting in yet another retracement to market lows. Copyright ©1997 by Market Stdies, Ine, All Rights Reserved, TD Sequential 14Fle View Inver Fst Toots Window Help JBSuperChtts by Omega Revearch [TD Sequential “a: lel RSA ARES etl onsale pete 1 ' Additional f Setup ; A | 185 i 480 | __ Additional __ . i Setup 38 475 2 12 "35 3 16 3 mF 8 31. An Example of ‘Recycling’ - Consecutive Setups Periodically, a strong market records a series of consecutive Setups as shown in this example. Note: The March °95 S&P 500 contract ‘Recycled’ twice after the initial Serup. Copyright ©1997 by Market Studie, Ine, All Rights Reserved. ‘TD Sequenti 15$BsuperCharts by Omega Research [TD Sequential 32] alaix) Fie View Inset Format Tools Window Heb PANT Con Daily . . alo) xd 285 38 375 Noy ‘Dec 96 32. An Example of ‘Recycling’ - Setup Within Another example of an additional Setup that might be ignored is a Setup whose true price range is contained entirely within the true price range of the Setup immediately before it. Similar to ‘Smaller’ Setups, Setups ‘Within’ are a sign that the prevailing trend may be in its final stages. ‘Copyright ©1997 by Market Studies, Ine, All Rights Reserved. TD Sequential 16PD SuvciChatiPt news REWAIEN TTD Sequel aay lala “ Loo, i ld =x) il 11304 11246 111928 111908 1102 110 41092 10824 1ne"n4 10716 106°28 108"08 1052 33. BUY Countdown - Bar #13 Below Bar #8 ‘The standard option for TD Sequential BUY Countdown is to require the LOW of bar 13 of Countdown to be LESS THAN the CLOSE of Countdown bar 8. If'a bar meets the requirement for Countdown 13, but the LOW of that bar is EQUAL TO or ABOVE the CLOSE of Countdown bar 8, an asterisk (*) or a dot appears below the bar to indicate that this qualifier is not met. Copyright ©1997 by Market Sudies, Ine, All Rights Reserved ‘TD Sequential 17‘DsSupeiChasts by Omega Research [TD Sequential 34] sts fie Yew Inset Fomat Tools Window Hel 34. SELL Countdown - Bar #13 Above Bar #8 ‘The standard option for TD Sequential SELL Countdown is to require the HIGH of bar 13 of Countdown to be GREATER THAN the CLOSE of Countdown bar 8. If a bar meets the requirement for Countdown 13, but the HIGH of that bar is EQUAL TO or BELOW the CLOSE of Countdown bar 8, an asterisk (+) or a dot appears above the bar to indicate that this qualifier is not met. Copyright ©1997 by Market Studies, Ine, All Rights Reserved. 1D Sequential 18PBSuperCHe Omega Research [TD Sequential 5-36] lala le Mew lat Fm Took. don Hob P00 SOME RAL ae Highest bar of Countdown Eisele Feb, 35.- 36. Entering A SELL Trade - Drawing the Line When TD Sequential completes the Countdown phase, a low risk buy or sell zone is identified. There are several methods to time when to enter a trade after the completion of Countdown. First, let’s examine where to draw the line and decide against entering a trade. For SELL Countdown, identify the highest bar of the Countdown phase. In the chart above, the inset shows that Countdown bar #12 is the highest bar of the Countdown phase, By taking the true range of Countdown bar #12 and adding it to the high, a line can be drawn on the chart that represents a maximum price. If the market closes above this line, the low risk SELL zone is cancelled since the market has gained renewed strength Copyright ©1997 by Market Studies, Ine. All Rights Reserved. TD Sequential 19suvexChaits by Omega Research [TD Sequential 37-38] le Vew Inset Fomat Tools Wedow Help ‘NSAP 500 INDEX 06/97-Daily it wh ie poof Elbe oon ‘ttl | ht lon, Wer br Feb ‘Mar Tape | 37.- 38. Entering A SELL Trade - Drawing the Line ‘After the completion of Countdown, price does not trade beyond the maximum price and the low risk sell zone continues. Copyright ©1997 by Market Studies, Inc. All Rights Reserved. ‘TD Sequential 208.90 points 120 18 | 39.- 40, Entering A SELL Trade A possible time to enter a SELL position after Countdown is complete, might be on the first bar that closes BELOW its open. In the example above, this occurred one day after the highest close, (shown on these charts with ‘¥’). Copyright ©1997 by Market Studies, Tne. All RightsReserved TD Sequential 21‘Psupeicharts by Omega Rezoaich {TD Sequential 41] Fil Vow Inge Famst Teele Wedow Help SEP 900 INDEX 09/97-Daily 12. | EEE 830 tel. 0 Hehorh " a ll 800 790 a | i | | | 780 770 | i] the, 7a 780 a 19 750 "3740 Lowest bar of Countdown 780 Mar pr 41. Entering A BUY Trade - Drawing the Line In this example, the lowest bar of Countdown is Countdown bar #13. By calculating the true range of Countdown bar #13 and subtracting the result from the low, a line can be drawn on the chart that represents the minimum price. If the market closes beyond this price, the low risk BUY zone is cancelled due to renewed market weakness, Copyright ©1997 by Markt Studies, Inc. All Rights Reserved, ‘TD Sequential 22BSuperCHs#%H Omeva Rerearch [TD Sequedtiolar}- KALA 51x) Ele Yew Fat ools Window feo SUP SNGADEN 99/94 Daily, sok) wll TET 42. Entering a Low Risk BUY Trade As this chart illustrates, after a BUY Countdown is complete, a possible time to enter a trade is on the first bar that closes ABOVE its OPEN. This occurred the day after the lowest close. (shown on this chart with ‘4. Copyright ©1997 by Market Sues. Inc. All Rights Reserve. ‘TD Sequential 23‘DSupeihaits by Omega Rescaich [TD Sequential 43] fle Yew Inset Format Jocks Window Help GATBOND DAY SESSION 03796 Daily 120" 11824 41708 1162 11402 1126 43, Entering a SELL Trade - No Entry In this example, after the completion of Countdown, the market continues to trade higher and closes beyond the ‘maximum price. By requiring a bar that closes BELOW the OPEN to initiate a trade, no entry would have been taken. Copyright ©1997 by Market Sadie, Inc. All Rights Reserved TD Sequential 24Dsupcrchsit'iy Oot ASEAN TTO'Sequentil #4} ale 44, Entering a Low Risk BUY Trade - Penetrating the Stop ‘As this chart illustrates, after a BUY Countdown is completed and a position is established once a CLOSE occurs ABOVE that same price bar’s OPEN, the minimum price can serve as a protective stop. Copyright ©1997 by Market Studies, nc, All Rights Reserved TD Sequential 25