TD
ARCS
Developed
and trade marked by Tom
DeMark, TD Arcs combine
a percentage retracement
with the time period.
Downtrend
(Upside Arc)
-
Connect
the most recent low to
the previous highest peak.
-
Draw
the Fibonacci retracement
levels (38.2% and 61.8%)
on this line, pivoting
at the recent low price
Uptrend
(Downside Arc)
-
Connect
recent high to previous
lowest low
-
Draw
the Fibonacci retracement
levels on this line, pivoting
at the recent high price
Interpretation
- Find
the highest high (A) between
the current low (B) and
the last time the price
exceeded this low, draw
a line connecting A and
B.
- Mark
the .382 and .618 Fibonacci
percentage reversal figures
on this line and swing
forward. TD Arcs are the
retracement levels marked
on the straight line
- A
time filter is used to
test the retracement strength.
Signals
If
the price retraces 38 percentage
points of the previous move
in less than 38% of
the period that generated
the last move, the price has
a greater chance of retracing
further to the 62% level.
The key
to TD Arcs is the speed with which the first
retracement level is reached and broken (or not)
by the price. If the 38% level is reached and broken
before the 38% Arc, there's a strong tendency for
the momentum to carry the price up through the next
retracement level at 62%. As the example above demonstrates,
however, if this doesn't occur quickly enough (before
the price reaches the 38% Arc) the momentum tends
to lag, the retracement becomes exhausted, and the
market once again follows the overall long-term
trend.
Further
Information
See
also Fibonacci arcs.
