ALGORITHM I

The N1 rule (N1 requirement) for Algorithm I is as follows:
 If point 1 is low, then the level of point 3 should be equal to or higher than point 1. 
 If point 1 is high, then the level of point 3 should be equal to or lower than point 1.

For an accurate understanding of the algorithm, you should familiarize yourself with UMG General Concepts.

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.