# TD Sequential

Also known as: Setup 9 / Countdown 13, setup perfection, TDST levels, aggressive variant, nine-count variants.
A Momentum & Oscillators concept (Exhaustion-count cluster (DeMark)) in the LuxAlgo Library, with 2 indicator implementations.

## What is TD Sequential?

TD Sequential is Tom DeMark's exhaustion-counting framework, built from two counts. Setup counts nine consecutive closes, each lower than the close four bars earlier for a buy setup (higher for a sell). Countdown then tallies thirteen qualifying closes, each at or below the low two bars earlier for a buy (at or above the high for a sell), and countdown bars need not be consecutive. Completed counts flag a trend that may be running out of fuel, not one that has already reversed.

DeMark built his counting studies through decades of consulting for institutional desks and published the framework's logic in his 1990s books, from which the licensed TD indicator suite spread across professional platforms. The design premise is distinctive: instead of measuring magnitude the way oscillators do, Sequential counts bar relationships, asking how long a move has kept beating its own recent past, and treats the ability to keep doing so as the thing that exhausts.

The framework carries its own refinements. A setup is 'perfected' when bar eight or nine trades beyond the extremes of bars six and seven. The extreme end of a completed setup (in DeMark's definition, the true high or low of the setup's first bar) projects a TDST level that behaves as [support or resistance](https://www.luxalgo.com/library/concept/s-r-zone/); holding or breaking it is DeMark's test of whether the trend deserves to continue. An aggressive variant qualifies countdown bars on highs and lows instead of closes.

Practice adds the discipline the counts alone lack. Completed nines and thirteens are conventionally traded only with a price flip (a close reversing the count's own four-bar relationship) or another confirmation, since persistent trends print completion after completion while running; counts can recycle when a new setup begins before countdown finishes; and the signals pair naturally with independent exhaustion evidence such as [momentum divergence](https://www.luxalgo.com/library/concept/regular-bullish-bearish-divergence/) or stretched [overbought/oversold](https://www.luxalgo.com/library/concept/overbought-oversold/) readings from a differently built tool.

## How to identify TD Sequential counts on a chart

The buy-side (bottom-finding) counts are described; mirror every comparison for the sell side.

1. Count the setup: nine consecutive closes, each below the close four bars earlier; any break in the streak resets the count.
2. Check perfection: the low of bar eight or nine trading at or below the lows of bars six and seven upgrades the setup.
3. Begin countdown after a completed setup: tally closes at or below the low two bars earlier until thirteen print; the bars need not be consecutive.
4. Mark the TDST level from the setup's origin (the true high of a buy setup's first bar) as the continuation-versus-reversal reference.
5. Wait for confirmation before acting: the conventional trigger is a price flip, a close back above the close four bars earlier.
6. Respect the framework's cancellations: a fresh opposing setup or a decisive TDST break says the count's story is over.

## How traders use it

- To anticipate [trend exhaustion](https://www.luxalgo.com/library/concept/trend-exhaustion/): completed 9s and 13s mark places where a persistent move is vulnerable, usually traded with a confirming price flip rather than blind.
- As objective levels: TDST lines drawn from setup extremes give a rule-based read on continuation versus [reversal](https://www.luxalgo.com/library/concept/reversal/) when price returns to them.
- As a filter on other signals: many traders use the nine-count alone (a TD9) as a caution flag against chasing late entries rather than as a standalone trigger.
- In confluence with magnitude tools: a thirteen completing while [RSI](https://www.luxalgo.com/library/concept/rsi/) diverges at an extreme stacks two different kinds of exhaustion evidence, counting and magnitude, which is stronger than either alone.
- Across timeframes: weekly counts frame the campaign while daily counts time entries within it, with agreement between the two treated as the higher-conviction configuration.

## TD Sequential vs other exhaustion reads

- **RSI** (https://www.luxalgo.com/library/concept/rsi/): RSI measures the magnitude of recent gains against losses and saturates at extremes; Sequential counts bar relationships and completes at fixed counts. One asks how hard the move has run, the other how long it has kept beating its own past, and they disagree often enough to be complementary.
- **Regular Bullish/bearish Divergence** (https://www.luxalgo.com/library/concept/regular-bullish-bearish-divergence/): Divergence infers exhaustion from an oscillator failing to confirm price; Sequential infers it from the count structure of price itself, no oscillator involved. Both are conditions rather than triggers, and the classic pairing demands both before fading a trend.
- **Overbought/oversold** (https://www.luxalgo.com/library/concept/overbought-oversold/): Zone readings mark a stretched state that can persist indefinitely. A completed count is an event, arriving once per sequence, with defined follow-ups (perfection, flip, countdown). The state says stretched; the count says the stretching pattern just completed its script.

## FAQ

### Is a TD9 a buy or sell signal on its own?

Not in DeMark's method. A completed nine-count setup flags potential exhaustion; the fuller framework waits for perfection, a price flip, or the thirteen-bar countdown before acting. In strong trends, setups complete repeatedly while price keeps running, which is why most practitioners treat counts as context or timing filters rather than standalone entries.

### What is the difference between TD Setup and TD Countdown?

Setup is the first phase: nine consecutive closes, each beyond the close four bars earlier, and the count resets if the streak breaks. Countdown begins only after a completed setup and tallies thirteen closes at or beyond the low or high two bars earlier. Countdown bars do not need to be consecutive, so a countdown can take far longer than nine bars to finish.

### What is a price flip in TD terminology?

The event that starts and confirms counts: a close crossing the close four bars earlier in the opposite direction of the preceding relationship. A bearish price flip (close below the close four bars ago after a stretch of higher ones) initiates a buy setup's counting conditions, and after a completed count, a flip in the reversal direction serves as the conventional trigger that the exhaustion is being acted on.

### What does setup perfection mean and does it matter?

A buy setup is perfected when the low of bar eight or nine reaches at or below the lows of bars six and seven, evidence the count ended with a genuine final push rather than a drift. Unperfected setups are treated as unfinished business that often gets completed later. It is a quality grade within the method: perfectionists wait for it, pragmatists trade the count with a flip regardless.

### How are TDST levels used?

As the framework's own continuation test. The true high or low of the setup's first bar projects a horizontal level: holding above a bearish TDST (or below a bullish one) says the prevailing trend still deserves respect, while a qualified break says the other side has taken over. Traders use them as objective stop and target references attached to the counts that created them.

### Does TD Sequential work in strongly trending markets?

This is exactly where it is most dangerous taken raw: persistent trends complete setup after setup while barely pausing, and every count fade loses. The framework's own answer is layered, countdown's stricter conditions, TDST breaks certifying continuation, and flips required before entries. The practical answer most users adopt: counts are exhaustion context, and in confirmed trends they mark profit-taking spots rather than reversal trades.

## Implementations in the Library

- Sequencer (LuxAlgo): https://www.luxalgo.com/library/indicator/sequencer/
- Reversal Signals (LuxAlgo): https://www.luxalgo.com/library/indicator/reversal-signals/

## Related concepts

- TD Combo: https://www.luxalgo.com/library/concept/td-combo/
- TD REI: https://www.luxalgo.com/library/concept/td-rei/
- DeMarker: https://www.luxalgo.com/library/concept/demarker/
- TD Pressure: https://www.luxalgo.com/library/concept/td-pressure/
- TD D-Wave: https://www.luxalgo.com/library/concept/td-d-wave/
- TD Auxiliary Studies: https://www.luxalgo.com/library/concept/td-auxiliary-studies/

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Source: https://www.luxalgo.com/library/concept/td-sequential/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/