What is the Average Directional Index (ADX)
The Average Directional Index (ADX) is a technical analysis indicator used to quantify the strength of a trend in a financial market. It is part of the Directional Movement System developed by J. Welles Wilder, which also includes the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI). The ADX helps traders determine whether a market is trending or not and how strong the trend is. ### Components of the ADX 1. **Plus Directional Indicator (+DI):** - Measures the strength of upward price movement. - Represents positive directional movement. 2. **Minus Directional Indicator (-DI):** - Measures the strength of downward price movement. - Represents negative directional movement. 3. **Average Directional Index (ADX):** - Measures the overall strength of the trend regardless of its direction. - Ranges from 0 to 100. - A high ADX value indicates a strong trend, while a low ADX v...