ADX INDICATORS

ADX (Average Directional Movement Index)

 

Indicator ADX is an indicator used to measure the strength of a trend, in ADX shows no ovebought or oversold do not like RSI and Stocastic, where the increase was ADX is indicative of an increasingly strong trend, either bullish or bearish.

ADX indicator consists of:

1.   ADX line (Color Red) A

2.   Line D + (Blue) C

3.   D- line (Yellow) B

The figure below is a chart of the GBP / USD Timeframe 1H.

Usefulness ADX line itself is:

• ADX line is in the region of 0-20 = do not take a position, because the price is still in a consolidation phase.
• ADX line is in the area of 20-30 = Get ready to take a position, because in this area the price starts to move either upward trend or downtrend.
• ADX line is in the area of 30-40 = trend that occurred was STRONG, either upward trend and downtrend.
• ADX line is located in the region 40-100 = trend was STRONG, will soon come to an end (position X in the image above).

While the function of the line D- and D + are:

D + D- cut from below, signal Uptrend
D + D- cut off from the bottom, signal Downtrend

Now consider the image below: GBP / USD Timeframe 1H and ADX period of 15

Note the candle that I circled, it indicates the price continues to move down and note the ADX indicator that I circled as well as well as the intersection of D + D- cut, where prices continue to move down from the top circle candle to the bottom and ends dilingkaran candle bottom , there was evident usefulness of the ADX line itself, at the bottom of the candle circle see also the ADX line that I circled near the letter X bearish trend has been depleted due to ADX line has also been located in the area of 40-100.