Average Directional Movement Index or ADX
Average Directional Movement Index, or ADX, was invented by J.Welles Wilder is an indicator used to analyze trading in the Forex market.
ADX has been very popular, can be used to indicate the strength of the trend, and can also tell you a BUY signal or SELL signal as well. It is a complete indicator and provides very high accuracy.
ADX normally ranges from 0-100 and consists of 3 lines.
The ADX (blue line) is the line used to indicate the strength of a trend, notice the slope of the ADX line.
If the ADX line has an upward slope, indicates that the market has the strength of the trend. Let us enter the trade.
On the other hand, if the ADX line has a downward slope. Showing that the market has a strong downtrend. Let us close, take profit or not enter the trade during that time.
Caution, the rising of ADX does not mean that the price will go up too. The ADX line is used to show the strength of the market, whether it is an uptrend or downtrend, not used to tell the direction of the price.
DI+ (green line) is a line used as a buy signal. Show the trend of a bullish market, when used in conjunction with the DI- line.
DI- (red line) is a line used as a sell signal. Show the trend of a bearish market, when used in conjunction with the DI+ line.
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