ADX

Average Directional Movement Index

ADX is used to evaluate the strength of current trend, be it up or down.

In Stockalyze +DI, and -DI are also plotted along with ADX. They can be used to generate buy and sell signals.

INTERPRETATION:

1. Use of ADX in identifying beginning and end of a trend.
   • A trend might be developing when ADX moves above 20.
   • A trend might be weakening when ADX moves below 40.
   • If ADX is below both +DI and -DI then it is advised to stop trading.
2. Using +DI and -DI in generating buy/sell signals.
   • Buy when +DI crosses over -DI.
   • Sell when -DI crosses over +DI.