Average Directional Index (ADX)
Exploring the Average Directional Index (ADX)
The ADX, a tool designed to evaluate the strength of market trends, was originally developed by Welles Wilder for daily commodity charts. Nowadays, it is widely employed by technical traders and financial experts across various market sectors to ascertain trend strength.
Grasping the Concept of the Average Directional Index (ADX)
The Average Directional Movement Index (ADX) functions as a neutral indicator that quantifies the strength of trends without being swayed by the direction of price changes. This system, known as the Directional Movement System, consists of both DMI+ and DMI- indicators along with the ADX, working together to measure price movement strength in both upward and downward trends. The ADX is represented as a singular line, with values that range from 0 to 100. Typically, this indicator appears in conjunction with the two directional movement indicator (DMI) lines in the same display area.
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