Average Directional Index ADX Definition & Meaning | Technical Indicator | CSIMarket
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Glossary

Average Directional Index ADX

Technical Indicator

1. The ADX line represents the strength of the trend. The higher the ADX line, the stronger the trend.
2. The +DI (positive directional indicator) line represents the upward movement of the market.
3. The -DI (negative directional indicator) line represents the downward movement of the market.

The ADX indicator is calculated using the following formula:

ADX = Moving Average of DX

DX = (ATR ÷ Close) x 100

Where:
- ATR (Average True Range) is a measure of volatility
- Close is the current closing price
- DX is a measure of the direction of movement

The ADX value ranges from 0 to 100, with values above 25 indicating a strong trend, and values below 20 indicating a weak trend or a non-trending market. Traders use the ADX indicator to identify potential buy and sell signals, such as when the ADX line crosses above or below a certain threshold or when the +DI and -DI lines cross.


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