Directional movement index
The underlying calculation, comparing +DI and −DI (the positive and negative directional indicators), that ADX is itself a smoothed average of. Shows raw directional strength.
What the numbers mean
The lookback for +DI and −DI, the two lines that measure how much of the recent range came from upward versus downward movement. Shorter settings make the lines cross more often; ADX is simply a smoothed average of the gap between them.
- 14 — the lookback for +DI and −DI
- +DI — the share of recent range that came from upward movement
- −DI — the share that came from downward movement
- ADX — the smoothed gap between the two, which is why they are always plotted together
How it is used
The crossing of +DI above −DI is read as buyers taking control and the reverse as sellers taking it, with the width of the gap indicating conviction. Most traders read it alongside ADX rather than alone.
- +DI crossing above −DI → buyers taking control
- −DI crossing above +DI → sellers taking control
- A wide gap between the lines → one side clearly dominant
How it relates to everything else
The DI lines supply the direction that ADX deliberately leaves out, so the three are one indicator in practice: DI crossings give the signal, ADX decides whether the signal is worth taking. Taken alone the DI lines cross far too often, which is exactly the problem ADX was invented to solve.
- DI cross + ADX above 25 → the complete Wilder signal
- DI crossings inside an ADX below 20 → noise, almost always
- The gap between the DI lines is what drives ADX up or down
What to watch for
On its own it crosses far too often to trade. The convention is to take DI crossings only while ADX shows the market is actually trending.