TD-Price Projectors

When the TD Line breakout is identified as true, the next step is to set the breakout price targets, i.e. the levels which will be reached after the breakout.

There are three methods to set these price projections after a true trend line breakout:

• TD-Price Projector 1 is not very precise in comparison to other projectors, but it is simple to calculate. In the case of an upward breakout, TD-Price Projector 1 is calculated as follows: the range from the lowest price below the TD-line up to the price point on the TD-line immediately above is added to the price in the TD-Line breakout point. In the case of a downward breakout price projection 1 is calñulated as follows: the range from the highest price above the TD line up to the price on the TD line right below is subtracted from the price on the TD line breakout point.
• TD-Price Projector 2 is calculated in a similar manner but, instead of the highest (if it is the uptrend) or the lowest (if it is the downtrend) price, it is required to select the low (high) of the bar with the lowest (highest) close below (above) the TD-line. This value is then added to the upward breakout price or substracted from the downward breakout price. Often TD-Price Projector 1 and TD-Price Projector 2 coincide.
• TD-Price Projector 3 is the most "conservative" of the three. In the case of a breakout of the descending TD-Line (ascending TD-Line) this projector is calculated as the difference (sum) between the TD-Line and the close of the bar with the lowest (the highest) price below (above) the TD-Line.

Once the trend line has been broken, Demark price projectors indicate the direction of the price movements:

Demark price projectors give the price movement guidelines once the trend line has been broken

Sometimes price projections fail. Usually this happens in the following cases:

• As the result of the opposite TD-line breakout, a new contradicting signal appears. In this case the previous signal is replaced by a new one and price projections has to be ignored; or
• The TD-Line breakout signal turns out to be false. Usually this becomes clear once the bar after the breakout closes lower (higher) than the ascending (descending) TD-Line, which has been broken.

source : www.alpari.com