Combines the Average Directional Index (ADX) with the Directional Movement Indicators (+DI and -DI), offering insights into both trend strength and direction.

Input Parameters:

  • Length: Number of periods used in the calculation.
  • Upper: Presets to 35 which represents the upper boundary of the indicator.
  • Lower: Presets to 20 which represents the lower boundary of the indicator.

Use Cases:

  1. Identifying Trend Strength: A rising ADX value indicates an increasing trend strength, while a falling ADX suggests a weakening trend. This information can help traders determine whether to enter or exit a position.
  2. Combining with Other Indicators: The ADX works best when used in conjunction with other technical indicators, such as moving averages or oscillators, to confirm the presence of a trend and provide additional trade signals.
  3. Generating Entry and Exit Signals: Traders can use the +DI and -DI lines to create entry and exit signals. A crossover of the +DI line above the -DI line may indicate a potential long entry, while a crossover of the -DI line above the +DI line may signal a short entry opportunity.

Do you want to learn more? Check out our Learning Center Article.


May 17, 2024

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