What does it mean that the DEMARK buy count completes the ninth-day breakthrough?

The DEMARK Buy Count 9 signals a potential bullish reversal in crypto when combined with a confirmed breakout above the highest high of the last four periods.

Jul 28, 2025 at 03:28 pm

Understanding the DEMARK Buy Count Indicator

The DEMARK Buy Count is a technical analysis tool developed by market analyst Tom DeMark. It is designed to identify potential reversal points in financial markets, including cryptocurrencies. The indicator operates by counting price bars based on specific closing price relationships to prior periods. When applied to crypto assets, it helps traders anticipate when a downtrend may be exhausting itself and a bullish reversal could be imminent. The count begins when certain bearish price conditions are met—typically when a closing price is lower than the close from two periods earlier. Each day that continues to meet specific criteria adds to the count, progressing toward a maximum of nine. The completion of the ninth day is considered a significant signal, especially when combined with a price breakthrough.

How the DEMARK Buy Count Reaches Day Nine

The progression to the ninth day is not automatic. Each day must satisfy DeMark’s proprietary rules to increment the count. For the buy count:

• A qualifying day occurs when the current close is less than the close two periods prior.
• If the close is higher, the count resets.
• Overlapping conditions involving highs and lows may also influence the count.
  When these conditions persist across nine consecutive qualifying periods, the system reaches Buy Count 9. This does not automatically trigger a buy signal. Instead, it sets the stage for a potential reversal. The full signal only activates when accompanied by a price breakthrough, which is a key component of the setup.
  

  What Constitutes a Ninth-Day Breakthrough?

  
  A ninth-day breakthrough occurs when, on or after reaching Buy Count 9, the price moves above a specific resistance level defined by the DeMark methodology. This level is typically calculated as the highest high of the last four periods (including the ninth count day). For cryptocurrency traders, this means monitoring the high prices on the relevant time frame—such as daily or 4-hour candles. The breakthrough must be a clean close above this level, not just an intraday spike. For example:
• If using daily candles, the closing price must exceed the highest high from the previous four days.
• On a 4-hour chart, the close of a 4-hour candle must break above the highest 4-hour high in the prior four 4-hour periods.
  This breakout confirms the completion of the buy setup and is interpreted as a strong indication of momentum shifting from bearish to bullish.
  

  Practical Application in Cryptocurrency Trading

  
  To apply the DEMARK Buy Count with ninth-day breakthrough in crypto trading, follow these steps:
• Select a cryptocurrency pair, such as BTC/USDT or ETH/USDT, on a charting platform that supports custom indicators (e.g., TradingView).
• Apply the TD Sequential indicator, which includes the Buy Count logic.
• Wait for the count to reach Buy Count 9. This may take several days depending on market conditions.
• Identify the four-period high starting from the first day of the count or as defined by the indicator’s algorithm.
• Monitor for a closing price above this high.
• Enter a long position on the close of the breakthrough candle or at the open of the next period.
• Place a stop-loss just below the lowest low of the nine-count period to manage risk.
  Many traders combine this signal with volume analysis—looking for increased trading volume on the breakthrough candle—as added confirmation of institutional or large trader participation.
  

  Interpreting the Signal in Volatile Crypto Markets

  
  Cryptocurrency markets are known for high volatility and rapid price swings, which can lead to frequent triggering of technical signals. The ninth-day breakthrough must be evaluated within this context. A completed buy count followed by a breakthrough during a period of low volume or during a known low-liquidity window (such as weekends) may be less reliable. Conversely, a breakthrough occurring with strong volume and coinciding with positive macro developments—such as favorable regulatory news or Bitcoin ETF inflows—can enhance the signal’s credibility. Traders should also consider the broader trend: a ninth-day breakthrough in a long-term downtrend may signal only a short-term bounce, while one occurring near a major support level or after a prolonged consolidation could indicate a more sustainable reversal.
  

  Common Misinterpretations and Pitfalls

  
  A frequent error is assuming that reaching Buy Count 9 alone is a buy signal. Without the breakthrough, the setup remains incomplete. Another mistake is acting on intraday wicks or spikes above the four-period high without waiting for a confirmed close. This can lead to false entries, especially in crypto, where price manipulation and volatility are common. Additionally, some traders apply the indicator on very short timeframes (e.g., 5-minute charts), where noise dominates, leading to excessive whipsaws. It is generally more effective on timeframes of 4 hours or longer. Lastly, failing to adjust for cryptocurrency-specific behaviors—such as pump-and-dump cycles or exchange-specific anomalies—can reduce the strategy’s effectiveness.
  

  Frequently Asked Questions

  
  Can the DEMARK Buy Count be used on altcoins?
  Yes, the DEMARK Buy Count can be applied to any cryptocurrency with sufficient price history and liquidity. However, low-cap altcoins with erratic price action may generate unreliable signals due to thin order books and susceptibility to manipulation. Major altcoins like ETH, BNB, or SOL tend to produce more consistent results.
  

  Does the ninth-day breakthrough work in sideways markets?
  
  In ranging markets, the DEMARK Buy Count may complete frequently without leading to strong trends. The breakthrough could result in only a minor price move before reversing. Traders often use additional filters, such as ADX below 25, to detect low momentum environments and avoid acting on signals during consolidation phases.

  Is the indicator available on all trading platforms?
  
  The TD Sequential, which includes the Buy Count, is available on TradingView as a built-in Pine Script indicator. It is not natively supported on most exchange interfaces (e.g., Binance or Coinbase), so traders must use external charting tools. Custom versions may exist on platforms like MetaTrader with third-party add-ons, but verification of accuracy is essential.

  How do you differentiate between a valid breakthrough and a fakeout?
  
  A valid breakthrough is confirmed by a close above the four-period high accompanied by rising volume and follow-through in the next period. A fakeout typically shows a close just above the level with low volume and immediate rejection in the subsequent candle. Using a confirmation candle—waiting for the next period to close higher—can reduce false entries.