DeMark TD Sequential: the exhaustion counter institutions use
Tom DeMark's TD Sequential is a counter-trend timing tool that tries to flag the exact point where a trend is exhausted and vulnerable to a reversal. It is one of the few "obscure" indicators professional managers actually use — it ships on Bloomberg terminals — yet retail barely knows it. It doesn't predict: it counts the tiredness of buyers and sellers through two phases, the Setup (9) and the Countdown (13).
By the TradingCalculator.Pro team · Updated on · About us
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What it is and what it's for
It's an exhaustion indicator, not a trend one: it looks for where a move has gone "too far, too fast" and is running out of steam. It works through two chained counts — a 9-bar Setup and a 13-bar Countdown — and performs best on 4h and higher. Its logic is counter-trend: it warns of possible tops and bottoms, not continuations.
The TD Price Flip (the trigger)
Before counting you need a change of polarity. A bullish flip happens when the current close tops the close 4 bars ago after having been below it; a bearish flip is the reverse. That flip resets things and starts the Setup count in the direction opposite to the prior leg.
The Setup: the count of 9
A buy Setup is 9 consecutive closes, each LOWER than the close 4 bars earlier; a sell Setup is 9 consecutive closes each HIGHER. By the 9 the trend has been stretched for a while and a reaction or pause often shows up. If the sequence breaks before the 9, it resets from zero.
A "perfected" Setup
Not all 9s are equal. The Setup is "perfected" when the low of bar 8 or 9 (in a buy setup) sits below the lows of bars 6 and 7 — or the high, in a sell setup, above them. That detail filters out weak signals and makes the reversal more reliable.
The Countdown: the count of 13
Once the Setup completes, the Countdown begins, measuring the final exhaustion. Here the close is compared to the high or low 2 bars earlier, and the numbers do NOT have to be consecutive. When the series reaches 13, the market is especially prone to turn: it is the zone of maximum trend vulnerability.
How to use it well
It's counter-trend, so it shines combined with levels: a 9 or a 13 that coincides with a support/resistance, a Gann level or a Fibonacci is far more reliable. Use it to anticipate exhaustion and fine-tune exits or counter entries, best on 4h/daily, and always wait for a price confirmation before acting.
Limits (honesty)
TD Sequential flags PROBABLE exhaustion, not a guaranteed reversal: in very strong trends a 9 or a 13 can appear and price just keeps going. It is not a complete system on its own; it works as a timing filter inside a plan with risk management. Trading every 9/13 blindly, against a powerful trend, is a fast way to lose.