Web Trader MT5
The Directional Movement Index is a technical indicator created by J. Welles Wilder that assesses the strength and direction of a price trend. It draws two lines, the positive directional indicator and the negative directional indicator that cross when the market moves between bullish and bearish momentum.
There is also a third line, the Average Directional Index, which evaluates the strength of the trend, no matter which direction it is going.
When the ADX is increasing and exceeds 25, it usually suggests that a strong trend is in place. If the model is flat and below 20 the market is probably range bound and trend following methods tend to struggle. Traders use the DMI to stick with strong trends for longer and to avoid chasing moves in directionless markets.
Example: A trader watches the positive directional indicator cross above the negative one and the ADX rising above 28. That signals to them that the combination is a bullish trend that’s gaining strength; not simply rising higher, but doing so with conviction, which provides them more confidence to keep the position rather than exit too early.
