Alphawick
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Average Directional Index

ADX

ADX measures the strength of a trend, regardless of whether it's up or down. It's derived from the Directional Movement System which also includes +DI and -DI. ADX ranges from 0 to 100, with readings above 25 typically indicating a strong trend.

Interactive Chart

44.32
ADX

Parameters

Smoothing period for ADX calculation.

Quick Answer

Measures trend strength regardless of direction. Developed by J. Welles Wilder Jr., ADX is part of the Directional Movement System.

Trading Signals

Strong Trend

Neutral

ADX above 25 indicates strong trend

ADX > 25

Ranging Market

Neutral

ADX below 20 indicates no clear trend

ADX < 20

Bullish DI Cross

Bullish

+DI crosses above -DI

+DI > -DI

Bearish DI Cross

Bearish

-DI crosses above +DI

-DI > +DI

What is ADX?

Developed by J. Welles Wilder Jr., ADX is part of the Directional Movement System. While +DI and -DI measure direction, ADX measures trend strength only. A rising ADX indicates a strengthening trend; falling ADX indicates weakening trend or ranging market.

How to Read ADX

ADX below 20: Weak or no trend (ranging). ADX 20-25: Possible emerging trend. ADX 25-50: Strong trend. ADX 50-75: Very strong trend. ADX above 75: Extremely strong trend (rare, often precedes exhaustion). Use +DI/-DI to determine trend direction.

Trading Signals

Key signals: ADX rising above 25 (trend emerging), +DI/-DI crossovers (direction change), ADX turning down from high levels (trend weakening), ADX below 20 (range-bound, avoid trend strategies).

Trading Strategies

Trend trading: Only take trending strategies when ADX > 25. Use +DI/-DI crossovers for entry: buy when +DI crosses above -DI and ADX > 25. In ranging markets (ADX < 20), use mean reversion strategies instead.

Formula

Formula
DM+ = Current High - Previous High (if positive)
DM- = Previous Low - Current Low (if positive)
DI = (Smoothed DM / ATR) × 100
ADX = 14-period smoothed average of |+DI - -DI| / (+DI + -DI)

Tips & Common Mistakes

Pro Tips

  • •ADX shows strength, not direction - use +DI/-DI for direction
  • •Rising ADX means trend is strengthening in either direction
  • •Use ADX to filter trend-following strategies
  • •Avoid breakout trades when ADX is very high (exhaustion)

Common Mistakes

  • •Thinking high ADX means bullish
  • •Using ADX alone without considering +DI/-DI
  • •Trading trends when ADX is below 20
  • •Not waiting for ADX confirmation on breakouts

Best Used With

Trend LinesMoving AveragesSupport/Resistance
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