ADX Gold Trading Analysis & ADX Trading Signals
Created by J. Welles Wilder
This a momentum indicator used to determine the strength of a xauusd trading 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 2 values & applying a smoothing function.
The ADX is not a directional technical indicator but a measure of the strength of the gold trend which has a scale of Zero to 100.
Higher the technical indicator value the stronger the trend.
A value of below 20 indicates that the xauusd market is not trending but heading in a range.
A value of above 20 confirms a buy or sell signal and indicates a new gold trend is emerging.
Values above 30 indicates a strong trending market.
When ADX indicator turns down from above 30, it indicates that the current gold trend is losing momentum.
Directional Movement Index Technical Indicator
Since the ADX alone is a directionless indicator it is combined with the DMI index to determine the direction of gold.
DMI
ADX & 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 gold trend direction.
Gold Trading Analysis & Generating Trading Signals
Buy Trading Signal
A buy trading signal is generated when +DI is above –DI, & the ADX technical indicator is above 20
The Exit signal is generated when indicator turns down from above 30.
Buy Trading Signal
Sell Trading Signal
A short signal is generated when –DI is above +DI, & the ADX technical indicator is above 20
The Exit signal is generated when indicator turns down from above 30.
Sell Trading Signal
