CumDown
Description
CumDown lets you test whether a specific number of consecutive bars have elapsed where the prices are less than their value a certain number of bars ago. It was created to make it easier to implement systems such as TD Sequential (by Thomas Demark). The TD Sequential setup requires 9 consecutive bars where the closing price is lower than the closing price 4 bars ago.
The complete TD system encompasses both entry and exit strategies and an extensive number of TD indicators. The CumUp and CumDown indicators are use to find setup conditions indicating overbought and oversold market conditions. They are designed to anticipate trend reversals. The CumUp looks for a number new high periods with only few low periods. The CumDown looks for a number of new low periods with only a few high periods.
In Candles sticks a new high or low is called Record Sessions. Candle theory, suggest if you have 8 to 10 near record sessions then the proceeding trend is due for a reversal. Record sessions count the bars slightly different to CumDown and CumUp.
Interpretation
There are three stages to a TD Sequential system, the Setup, the Intersection and the Count down. After each stage is triggered move onto the next stage. The following for is for oversold markets. See CumUp for overbought. System.
· The buy Setup consist of a series of at least nine consecutive closes less than the close four trading bars earlier. This indicates a possible oversold market.
· The buy Intersection, look for the high of bar 8 of the buy setup to be greater than or equal to the low of bars 5, 4, 3, 2 or 1 of the buy setup. If this is not fulfilled, then each successive price bar is compared until its high is greater than or equal to the low of the price bar three or more price bars earlier back to bar 1 of the buy setup. Protects against run away price action.
· The buy Countdown consists of a series of 13 successive closes less than or equal to the low two price bars earlier. Once that has been accomplished, the market generally is in a low-risk buy entry zone. Good time to go long.
Calculation
CumDown returns a count of the number bars since a new high. The count is reset when the specified number of new high periods occur. The total bar count includes the number of new lows and the number of new highs.
Example
{ Highlight extreme moves down }
var Bar, n: integer;
for Bar := 0 to BarCount - 1 do
begin
n := Trunc( CumDown( Bar, #Close, 3 ) );
if n > 9 then
n := 9;
SetBarColor( Bar, n * 100 );
end;
