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Average Directional Index (ADX)

This indicator shows if a certain vehicle is trending or not. Ranging between 0 and 100. It will go up the more the price is trending, either up or down. The more the price stays consolidated and not trending, the lower the ADX will be.

Example

Interpretation

The Average Directional Index shows trend strength and not the direction of the trend. It signals that price is trending (either up or down) when above 80. So both strong upward and strong downward trend will make the ADX go up.

Use it to determine if something is trending or not and use interpret other indicators accordingly.
Moving Averages will be very useful when price is trending.
Oscillators will be very useful when price is not trending (consolidating).

Define the different levels of trend with the following list:

  • 20 or lower, a non trending market
  • 20 to 40, a confirmation of emerging trend.
  • 40 to 50, a very strong trend.
  • 50 to 70, an extremely strong trend.
  • 70 and higher, a very rare power trend.

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