How to Trade Cryptocurrencies Profitably Using TD Sequential]-Steemit Crypto Academy | S4W8 | Homework Post for @reddileep

TD sequential indicator is a technical analysis tool that was developed by a successful technical analyst who has made alot of profit from the market whose name is Tom DeMark, which is the reason for the name of the indicator TD using his initials.

This is a powerful tool that has been designed to detect the right time a trend will be exhausted and when the price will reverse. This indicators can be used In any time frame but however it is more dependable on a 4H timeframe and above.

We are quite aware of what a market correction and reversal is, it is simply the level at which a price reverses after the market goes in a certain direction. When the change in the direction changes temporarily it indicates a market correction and when it changes for a long period it is known as a reversal.

Some of the key features of the TD sequential indicators are;

The TD sequential can be used for any financial asset that is trader and it can be used under any time frame

The TD sequential indicators consists of two phases which are the Setup phase(9 counts) and the countdown phase (13 count).

Only with a Japanese candlestick or Bar chart can a TD sequential work with.

The TD sequential is very useful for the early recognition of market turning points

The TD sequential also has a special features such as the generating of support and resistance levels.

Modifications can be done to the TD rules which brought about various types of TD indicators.

PSYCHOLOGY BEHIND TD SEQUENTIAL

The TD sequential indicator consist of two pattern or phase which is known as the TD setup and TD countdown. The TD setup is a short duration that last for nine price bars when completed.

A buy setup ovvurs when there have been formation of consecutive nine price bars in which each price candlestivk is lower than the close of four candlestick earlier. Whenever there is a close below that of four previous candlestick a 1 is written on it, also when the next bar also closes below the previous four candlestick a 2 is written in it and the trend goes on like that.

As seen in the screenshot above whenever the candlestick fails to close below the four previous candlestick the setup is abandoned and started all over again. If 9 candlesticks are able to be developed the trader will look for a perfect setup which he can use in entering the trade. W perfect setup is when the candlestick 8 or 9 is less than the lows of bar 6 or 7.

For TD countdown it occurs after a setup.is completed, A TD countdown consist of thirteen candlesticks whose close is lower than or equal to the low of two prior candlestick, the numbers are written below the candlesticks.

A countdown doesn't have to be formed in days it can take months for a countdown to form and this akwasy signify a large change in market movement

There is also a criteria for perfection in the countdown which is that the low of candlestick 13 must be less than or equal to the close of candlestick 8 but for a sell perfection the high of candlestick 13 must be greater than or equal to the close of candlestick 8.

DIFFERENCES BETWEEN TD SETUP AND TD COUNTDOWN

1. For TD setup it always involve 9 candlesticks while for the TD countdown it is unlimited.

2. For TD setup there is always need for 9 consecutive candlesticks which have to close loer than the previous for candlesticks while the TD countdown consist of 13 candlesticks which close is less than or equal to the low of the 2 candlesticks formed earlier

3. .a perfect buy for TD is when the low of either candlestick 8 or 9 is less than the lows of candlestick 6 or 7 while for TD countdown the low if candlestick 13 must be lower than or equal to the close of candlestick 8.

4. A sell signal for TD setup is that the 9 consecutive candlesticks close are greater than the close of the 4 candlestick earlier while for TD countdown the 13 candlestick bar close must be greater than or equal to the low of of 2 candlestick earlier.

EXPLAINING THE TD SETUP IN BEARISH AND BULLISH TREND

I will be explaining the TR setup in a brief explanation during a bull and bear trend.

BULLISH TREND TD SETUP

For a bullish trend TD setup a number 1 is plotted at the starting of a candlestick manages to close higher than the close of a candle four period back. The main key or rule for the calculations of the TD sequential is the Four- period rule which usually repeats itself over and over again.

Also the second number 2 is plotted if the next xabdle manages to close higher than the close of the candle four periods back. The signal of reversal is when the TD sequentials was able to plot up to number 9 on the candlestick. In a nutshell if the number 1 to 9 was plotted on the candlestick successfully with the candlesticks close higher than that of the 4 periods back.

If during the plotting a candlestick closes lower than the candle four periods back the TD setup cancels immediately and starts again. A perfect setup is when the highs of 8 and 9 cabdle is higher than the highs of 6 and 7 candle, look at the screenshot above for a typical example.

Bearish Trend TD Setup

For a bearish trend TD setup, the first number 1 is plotted when a candlestick closes lower than the close of a candle four periods back, this is the inverse of the bearish TD setup, this rule is followed for the consecutive candles that will be formed.

The point of the reversal is when the TD sequentials successfully plots 9 numbers below the candlestick. This means when 9 consecutive candlestick closes lower than the candlestick if 4 periods back. If during the formation a candle closes higher than the candlestick of the four period back the TD setup is canceled.

A perfect setup is when the low of the 8th and 9tb candlestick is lower than the lies of the 6th and 7th candlestick. Check the screenshot above for an example.

DETECTING A REVERSAL SIGNAL

As explained above if any of those lattterns are completed there is a probability for a reversal of the market in the opposite direction. The number 9 is the ideal signal for entering a trade in the opposite direction. Although it is important to wait for the formation of a new candlestick to confirm your entry.

As seen in the screenshot above we can see a bullish setup and this signifies that after the completion there will be a reversal so after the point 9 we. See formations of some candles going in the same direction before a reversal candlestick formed and we saw a bearish trend afterwards.

The reason why the reversal wasn't immediately was because the candlestick formed after the resistance line which is the dotted line shown on the chart.

In this screenshot we saw a bearish setup, after which there was a reversal of the market formed immediately after the 9 candlestick has been formed. The red dotted line acts like the support and the price bounced back from it. Whenever the candlestick doesn't cross it the reversal will be immediate.

After seeing a possible reversal when the candlestick doesn't cross the resistance or support line to set a stop loss it should be above or below the high or low of the 9th candle.

USING THE TD INDICATOR TO PLACE A TRADE

The chart above is a4H time frame of the ETHSUDT pair. According to the chart we can see the TD bullish setup has been completed and we wait for a reversal which has played out in the chart.

According to the chart we can see that setup formed above the resistance line which means the reversal signal isn't very strong, but with the confirmation of the candlestick we can see a reversal coming through. The price might not reverse to the former support levke and just stop at the former RESISTANCE making it it's new support level. So according to this I placed a trade on the market by entering at the market price, then I set my first take profit at the former RESISTANCE level as seen in the screenshot below.

The trade has been successfully placed, so we wait to check the outcome of the trade placed.

@reddileep