Exhaustion Indicators

Exhaustion indicators help identify when a trend is losing momentum and may be about to reverse. They're particularly useful for spotting potential turning points in the market.

🎯 Tom DeMark Sequential

The TD Sequential is a sophisticated indicator developed by Tom DeMark that identifies potential trend exhaustion points through a two-phase process:

  • Setup Phase: Counts consecutive closes higher or lower than closes 4 periods ago
  • Countdown Phase: Requires 13 closes to complete (not necessarily consecutive)
  • Bullish Setup (1): Series of lower closes suggesting potential bottom
  • Bearish Setup (-1): Series of higher closes suggesting potential top
  • No Setup (0): No significant pattern detected

Note: A complete TD Sequential setup requires 9 consecutive qualifying closes. The indicator is most powerful when combined with other technical analysis tools.

Tom DeMark Sequential (TDS)

Identifies potential trend exhaustion and reversal points

Code Example

import { TDS } from 'trading-signals';

const td = new TDS();

// Returns 1 for bullish setup
// Returns -1 for bearish setup
// Returns 0 otherwise
const result = td.add(closePrice);

console.log(result);

Interactive Demo

Current Result:
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Using Exhaustion Indicators

Exhaustion indicators work best when combined with other forms of analysis. Here are some best practices:

  • Look for confirmation from volume indicators (like OBV) when a setup completes
  • Use momentum indicators (like RSI) to confirm overbought/oversold conditions
  • Consider the broader trend context - exhaustion signals are stronger against the prevailing trend
  • Wait for price action confirmation before taking positions based solely on exhaustion signals

⚠️ Important Disclaimer

Signals by technical trading indicators are not guarantees. Always use proper risk management, confirm signals with multiple indicators, and never rely on a single indicator for trading decisions. This library is for educational purposes and does not constitute financial advice.