What is ADX?
Measures the strength of a trend regardless of its direction. Higher values indicate stronger trends.
Think of it like this
Like a speedometer that shows how fast you're moving without indicating whether you're going north or south.
Formula
ADX = Smoothed average of DX values- DX: |(+DI - -DI)| ÷ (+DI + -DI) × 100
- +DI: Positive Directional Indicator (uptrend strength)
- -DI: Negative Directional Indicator (downtrend strength)
Why it matters
- Identifies trending vs ranging markets
- Helps choose appropriate trading strategies
- Rising ADX = strengthening trend
- Works with +DI/-DI for direction
What's a good value?
< 20
Weak/No Trend
Market is ranging, avoid trend strategies
20-25
Emerging Trend
Trend may be developing
25-50
Strong Trend
Follow the trend
> 50
Very Strong
Powerful trend in place
Real-world example
ADX at 35 with +DI > -DI indicates a strong uptrend is in progress.
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