Average Directional Index ADX

Average Directional Index ADX - Directional Movement Oscillator CVB

Order is the most widespread trend strength indicator when it's Average Directional Index (ADX), which is based on the Directional Movement Index DMI by Welles Wilder. For a detailed derivation of the DMI, please read the relevant post, reduced to essentials, it is a concept to determine trend strength and direction based on the upward or downward price changes and the true range under consideration of possible gaps. The sub-indicators + DI and-DI to make conclusions about the direction of the trend, DMI, ADX solely on the strength of trend.

At the Average Directional Index is now at the smoothed version of the DMI, which exist in the type of smoothing very different approaches. While the original concept of Wilder Simple Moving Average (simple smoothing) is used, today, the Exponential Moving Average (exponential smoothing) the rule dar.

ADX shows only the principle of trend strength, but not the trend direction. In general, different boundary Linen file lines are used, often a first line drawn at 20 and a second in the range between 30 and 45 In trendless phases, the value of ADX is very low, with increasing intensity trend of the indicator begins to rise. Of a strong trend in the upper extreme range likely, at values ​​of less than 20 trend-less market phases. The main conclusions when using the ADX-concept can be seen in the identification of trending and trend strength, while very low and falling values, the use of oscillator approaches suggest, however, make high and rising values ​​of trend-following models make sense. It should be noted that the different smoothing variants considerable influence on the progress indicator has some quite significant because a delay is observed in the reaction behavior. Biggest "enemy" of the concept are shown rapid and substantial movements.


A special form of the Average Directional Index is the ADXR that results from an additional smoothing of the ADX. Specifically, the sum of the current indicator value and the value is formed from n periods and then dividing by two.

Should be considered to conclude by the Directional Movement Oscillator DMO, obtained simply by subtracting the + DI-DI from partial indicator of the DMI. The only parameter in the calculation is the period specified with shorter periods of time lead to a picture of the price momentum.

From the DMI-concept basis, it is likely the reader open up that trendy phases gekenzeichnet by a strong divergence of + DI (sum of the upward price movements in the calculation period) and DI (sum of the downward price movements) while the oscillator while trend of weak or trend-less periods around the zero line oscillates as + DI and-DI close together. The most important application of the DMO is looking for divergences between the indicator value based on the course and the course. Such divergence can then be identified, for example when there are new recorded in the underlying high-or new lows, DMO does not confirm this.