Learn K-Line from Scratch | 26 Common Analysis Indicators 8—TD
Rises and falls have trends; understand the language of prices;
Buying and selling have signals; say goodbye to emotional trading .
I. Main Chart TD Indicator
First, let's look at what the TD indicator is?
Thomas R. DeMark, a renowned master in the field of technical analysis, has developed a series of indicator systems, among which the most widely applied is the DeMark sequence, also known as the TD sequence. The TD sequence is used to calculate the timing of trend exhaustion, identify potential turning points during market trends or consolidation periods, and provide recommendations on entry and exit points.
Before learning the TD sequence, let's first understand what the TD structure is. The TD structure is divided into buy structure and sell structure. Let's examine each separately.
II. TD Buy and Sell Structures
How is the TD buy structure formed?
Screenshot from OKX BTC quarterly contract daily chart. As shown in the figure, the formation of the TD buy structure occurs when 9 consecutive candlesticks appear, and the closing prices of these candlesticks are all lower than the closing prices of the 4th candlestick before each respectively; the highest price of the first candlestick of the TD buy structure is the TD buy structure trend resistance line, referred to as the TD trend resistance line.
How is the TD sell structure formed?
Screenshot from OKX BTC quarterly contract daily chart. As shown in the figure, the formation of the TD sell structure occurs when 9 consecutive candlesticks appear, and the closing prices of these candlesticks are all higher than the closing prices of the 4th candlestick before each respectively; the lowest price of the first candlestick of the TD sell structure is the TD sell structure trend support line, referred to as the TD trend support line.
III. TD Sequence Counting
After understanding the buy and sell structures, let's look at how the TD sequence counts, using the TD buy structure as an example.
How is the first candlestick of the TD buy structure determined?
Screenshot from OKX BTC quarterly contract daily chart. The TD buy structure is shown in the black box in the figure. The area of 6 consecutive candlesticks including the first candlestick of the TD buy structure is shown in the purple dashed box in the figure. It requires at least 6 candlesticks, where the closing price of the 5th candlestick is higher than the closing price of the first candlestick, and the closing price of the 6th candlestick is lower than the closing price of the 2nd candlestick. When all three conditions above are met simultaneously, the first candlestick of the TD buy structure can be determined.
TD sequence buy counting can be discontinuous, meaning that when certain candlesticks do not meet the counting conditions, the counting is temporarily interrupted.
Screenshot from OKX BTC quarterly contract daily chart. The black box consisting of 8 consecutive candlesticks is an interrupted TD structure. When it is discovered that the closing price of the candlestick shown in the red circle in the figure is not lower than the closing price of the 4th candlestick before it, the TD buy sequence counting condition is not met, so the buy counting is interrupted, and subsequently a new sell sequence counting begins.
Starting from the 9th candlestick of the TD buy structure, if the counting rules are still met, add one count, with a maximum count value of 13.
Screenshot from OKX BTC quarterly contract 1-hour chart. The consecutive candlesticks after the 9 candlesticks still meet the counting rules of the TD buy structure, and the maximum count is 13. Therefore, the black box area consisting of 13 consecutive candlesticks in the figure is a TD buy structure with a sequence of 13. No counting is performed for candlesticks that still meet the counting rules after the 13 sequence.
The TD sell structure is exactly opposite to the TD buy structure. When 9 consecutive candlesticks appear, and the closing prices of these candlesticks are all higher than the closing prices of the 4th candlestick before each respectively, a TD sell structure is formed. For specific usage, refer to the TD buy structure.
IV. Application Rules of TD Indicator
Finally, let's learn about the buy and sell signals of the TD indicator.
First, let's look at the TD buy signal. When a complete TD buy structure is formed, the price may reverse, and you can consider buying.
Case 1: Screenshot from OKX BTC quarterly contract daily chart. The black box area is a TD buy structure with a sequence of 9, and the lowest price of the 8th or 9th candlestick is lower than the lowest prices of the 6th and 7th candlesticks. You can buy after this TD buy structure is formed. The stop-loss can be set below the lowest price within the TD buy structure. Subsequently, the coin price begins to rebound.
Case 2: Screenshot from OKX BTC quarterly contract daily chart. The black box area is a TD buy structure with a count sequence of 13. You can perform a buy operation after this TD buy structure ends. Similarly, the stop-loss can be set below the lowest price within this TD sequence. Subsequently, the coin price begins to rebound.
Second, let's look at the TD sell signal. When a complete TD sell structure is formed, the price may reverse, and you can consider selling.
Case 3: Screenshot from BTC quarterly contract daily chart. The black box area is a TD sell structure with a sequence of 9, and the highest price of the 8th or 9th candlestick is higher than the highest prices of the 6th and 7th candlesticks. You can sell after this TD sell structure is formed. The stop-loss can be set above the highest price within the TD sell structure. Subsequently, the coin price begins to decline.
Case 4: Screenshot from OKX BTC quarterly contract daily chart. The black box area is a TD sell structure with a count sequence of 13. You can perform a sell operation after this TD sell structure ends. Similarly, the stop-loss can be set above the highest price within this TD sequence. Subsequently, the coin price begins to fall back.
Finally, several special reminders regarding this indicator: When operating based on the TD buy and sell structures in this indicator, there is a certain degree of risk; generally, operating according to buy and sell structures with a sequence of 13 has a higher success probability; candlesticks that still meet the counting rules may still exist after buy/sell sequences 9 or 13.
Disclaimer
This article may contain product-related content that is not applicable to your region. This article is intended to provide general information only and does not assume responsibility for any factual errors or omissions contained therein. This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any of the following advice, including but not limited to: (i) investment advice or investment recommendations; (ii) an offer or solicitation to purchase, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves high risk, may fluctuate significantly, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions regarding your specific situation, please consult your legal/tax/investment professional. The information appearing in this article (including market data and statistics, if any) is for general reference only. Although we have taken all reasonable precautions in preparing these data and charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be copied or distributed in full, or excerpts of 100 words or less from this article may be used, provided that such use is non-commercial. Any copying or distribution of the entire article must also prominently state: "This article is copyrighted © 2025 OKX, used with permission." Permitted excerpts must cite the article name and include attribution, for example "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.
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