ADX Energies Technical Analysis & ADX Trading Signals
Developed by J. Welles Wilder
This a momentum indicator used to determine the strength of a energies price trend; it is derived from the DMI - Directional Movement Index which has two lines.
+DI - Positive Directional Movement Index
-DI - Negative Directional Movement Index
ADX is calculated by subtracting these two values and applying a smoothing function.
The ADX is not a directional technical indicator but a measure of the strength of the energies trend which has a scale of Zero to 100.
The higher the technical indicator value the stronger the trend.
A value of below 20 indicates that the energies market is not trending but moving in a range.
A value of above 20 confirms a buy or sell signal and indicates a new energies trend is emerging.
Values above 30 signifies a strong trending market.
When ADX indicator turns down from above 30, it indicates that the current energies trend is losing momentum.
ADX combined with DMI Indicator
Since the ADX alone is a directionless indicator it is combined with the DMI index to determine the direction of the energies.
DMI
ADX and DMI Index
When the ADX is combined with DMI index a trader can determine the direction of the trend and then use the this indicator to determine the momentum of the prevailing energies trend direction.
Energy Technical Analysis & How to Generate Trading Signals
Buy Trading Signal
A buy signal is generated when the +DI is above -DI, and the ADX technical indicator is above 20
The Exit signal is generated when trading indicator turns down from above 30.
Buy Trading Signal
Sell Trading Signal
A short signal is generated when the -DI is above +DI, and the ADX technical indicator is above 20
The Exit signal is generated when trading indicator turns down from above 30.
Sell Trading Signal
