Everyone has said what needed to be said but i would like to summarize.
The lower pitch goes under the higher pitch
or the smaller section goes under the bigger section
or the shorter section(ridge height) goes under the higher ridge section.
Points must be cut back if doing a open valley.
I have never installed a open valley on a shingle roof.
Open valleys should be reserved for non flexible material. Tile, metal, shake. Its not a rule or a law though, its just the way i do it.
You dont have to cut the points back on a closed valley. I never have and i never will.
I agree with axiom that trying to cement your closed valley after it has been installed would do more damage than good.
I install about a 6 inch strip of 1/8 thick cement in my valleys no closer than 6 inches from the center of the valley.
In a closed valley, the purpose of the cement is not for waterproofing. The valley will not leak because you didnt cement it. The cement there is for hurricane protection.
Closed valleys leak because you have a seam or a nail too close to the center of the valley.