ADX

The Average Directional Index (ADX) is an indicator that helps traders determine the strength of the current trend (but not the direction). ADX trades on a fixed scale ranging from 0 to 100 and is derived from 3 lines: ADX, DMI +, and DMI -. The default setting is typically 14 periods.

The higher the ADX reading, the stronger the strength of the price trend. Readings never go below 0 and generally will not be seen above 60. An ADX reading below 20 is considered to be a range-bound market. A price trend with a reading above 30 is considered to be a strong trend. A reading above 40 is considered very strong, and the trader should expect the trend to subside in the near future. An ADX reading above 50 is considered to be a parabolic move, meaning near-vertical price change, and should be expected to slow very shortly.


DMI