This paper represents a step in our program towards the proof of the Pierce–Birkhoff conjecture. In the nineteen eighties J. Madden proved that the Pierce-Birkhoff conjecture for a ring A$is equivalent to a statement about an arbitrary pair of points and their separating ideal ; we refer to this statement as the Local Pierce-Birkhoff conjecture at . In this paper, for each pair with , we define a natural number, called complexity of . Complexity 0 corresponds to the case when one of the points is monomial; this case was already settled in all dimensions in a preceding paper. Here we introduce a new conjecture, called the Strong Connectedness conjecture, and prove that the strong connectedness conjecture in dimension n-1 implies the connectedness conjecture in dimension n in the case when is less than n-1. We prove the Strong Connectedness conjecture in dimension 2, which gives the Connectedness and the Pierce–Birkhoff conjectures in any dimension in the case when less than 2. Finally, we prove the Connectedness (and hence also the Pierce–Birkhoff) conjecture in the case when dimension of A is equal to , the pair is of complexity 1 and is excellent with residue field the field of real numbers.

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