What It Is
The ADX (Average Directional Index) is a trend strength indicator created by J. Welles Wilder. Unlike most indicators, ADX doesn't tell you trend direction - it tells you how strong the current trend is.
Key insight: ADX rises when a trend is strengthening (whether up or down) and falls when price is ranging or the trend is weakening. It's a filter - use trend strategies when ADX is high, range strategies when ADX is low.
The full ADX system includes three lines: ADX (strength), +DI (bullish pressure), and -DI (bearish pressure). The DI lines show direction while ADX shows conviction.
Trading Strategies
Trading Strategies DI Crossover Strategy Trade when +DI crosses above -DI with ADX rising...
DI crossovers, trend filtering, and combining with other indicators.
ADX tells you how strong the trend is, not which direction. Combine it with +DI/-DI or price action for direction. ADX above 25 with a clear trend structure is where your best trades live.
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Compare this reference with related structures and readings before applying it to a live chart.