ALGORITHM I
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1. Find Point 1. Search for a Confirming Extremum.
- 1.1. The program searches for the first possible extremum that satisfies rule N1. This extremum is a candidate for point 1.
- 1.2. When a candidate for point 1 is found, all bars to the left (i.e., in the past) of the bar containing the candidate extremum are checked until one of the following events occurs:
- 1.2.1. The point of the last intersection of the price level with the candidate for point 1 is found. In this case, the program searches for an absolute extremum that confirms point 1 from the intersection of the price level with the candidate for point 1 (inclusive) to the bar of point 1 (exclusive). There are two possibilities:
- 1.2.1.1. If the extremum is not found, the program searches for a new candidate for point 1.
- 1.2.1.2. If the extremum is found, the candidate for point 1 is confirmed. The program then checks for the absence of extremums equal to point 1 from the beginning of the preceding to point 1.
- 1.2.1.2.1. If such an extremum is found, this candidate for point 1 is discarded (the program continues to process other candidates for point 1).
- 1.2.1.2.2. If such an extremum is not found, the program proceeds to process the next bar after point 1 according to point 2 of the Algorithm.
- 1.2.2. The program has reached the starting point of the chart (i.e., after the starting point of the chart, the levels of points 1 and 2 have never intersected). The program searches for a confirming extremum from right to left to the starting point of the chart. The options are similar to the sub-items 1.2.1.1. and 1.2.1.2.
- 1.2.3. The program has checked 50 bars preceding the bar of the potential point 1, and none of the above events have occurred. The program searches for a confirming extremum from right to left in the area of 50 bars before the potential point 1. The options are similar to the sub-items 1.2.1.1. and 1.2.1.2.
- 1.2.1. The point of the last intersection of the price level with the candidate for point 1 is found. In this case, the program searches for an absolute extremum that confirms point 1 from the intersection of the price level with the candidate for point 1 (inclusive) to the bar of point 1 (exclusive). There are two possibilities: