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.
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