Trade Forex Trading

Learn Forex Lessons, Strategies and Technical Analysis

Average Directional Movement Index - ADX Forex Technical Analysis and ADX Forex Trading Signals

Developed by J. Welles Wilder

 

This a momentum indicator used to determine the strength of a 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.

Average Directional Movement Index (ADX)

 

 

The ADX is not a directional indicator but a measure of the strength of the trend which has a scale of Zero  to 100.

 

The higher the indicator value the stronger the trend.

 

A value of below 20 indicates that the market is not trending but moving in a range.

 

A value of above 20 confirms a buy or sell signal and indicates a new trend is emerging.

 

Values above 30 signifies a strong trending market.

 

When ADX turns down from above 30, it signifies that the current trend is losing momentum.

 

 

ADX combined with DMI - Directional Movement Index

 

Since the ADX alone is a directionless indicator it is combined with the DMI index to determine the direction of the currency pair.

ADX indicator combined with DMI- Directional Movement Index

DMI

 

 

ADX and DMI Index

ADX indicator 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 trend direction.

 

Regulated Broker

Takes 4 to 6 weeks to open an account, open early and fast track: Read The Article "Account Opening Procedure"

Trade with a European Forex broker regulated and licensed in 13 countries; 11 European countries and in Australia and New Zealand: Read The Article "Regulated Forex Broker"

 

Forex Technical Analysis and Generating Forex Trading Signals


Buy Signal

A buy signal is generated when the +DI is above –DI, and the ADX is above 20

 

The Exit signal is generated when the indicator turns down from above 30.

Technical Analysis of ADX indicator- Buy Signal

Buy Signal

 

 

Sell Signal

A short signal is generated when the –DI is above +DI, and the ADX is above 20

 

The Exit signal is generated when the indicator turns down from above 30.

Technical Analysis of ADX indicator- Sell Signal

Sell Signal

Forex Market Sentiment

The EURUSD is at a major support level, Open an account and start trading EURUSD which is oversold and at a major support level: Read The Article "Support and Resistance levels"

Another reason to start being bullish on the EURUSD and EURJPY is Risk Appetite vs The Risk Averse sentiment used when trading high yielding currencies vs the US Dollar and the Japanese Yen when world economies start reporting data that is supporting economic growth: Read The Article "Risk Appetite vs The Risk Averse"


Eurozone Economic Growth Gains Momentum in November - Eurozone economic growth accelerated to its fastest pace and was at an all-time high, order books grew and factories were prompted to add more workers and raise the prices of their goods as the economic environment in Europe grew the fastest as shown by economic data – November Composite PMI for manufacturing and services grew to the strongest in 18 months and was at an all-time high of 54.1, up from 53.3 in October. There are two PMI data reports - one for manufacturing and the other one for services. The PMI for manufacturing was at an all-time high of 34 months and rose to 53.7 in November while that of services rose to an all-time 11 months high of 54.1; Marking a strong expansion in economic growth and signaling that the recovery in Europe is continuing to gather momentum thanks to the €1.7 trillion quantitative-easing program being carried out by ECB in Europe. IHS Markit has said that companies are on boarding new staff at the fastest pace ever since 2008, as the prices of goods increased the most in five years as companies continued to pass the production cost to their consumers – the November PMI showed the steepest monthly increase in business activity with plenty of signs that the economic growth will continue to accelerate as the inflation in Europe continues to intensify steadily. Open an account and start trading EURUSD and EURJPY today.


Major Market Mover - Non Farm Payrolls on Friday: Open an Account Today and Trade NFP on Friday

First OPEC Deal on Oil production cut in 8 years fuels more risk appetite: Open an Account Today - Don't Miss Out on the trades


Read The Articles: Eurozone Economic Growth Gains Momentum in November - Fueling Risk Appetite in FX trading


Regulated Broker

Poland FX Seminar Gala

XM Account Holders Attend Poland FX Seminar

XM Account Holders Hungary Seminar

Malaysia Seminar

XM Account Holders Phillipines Seminar

XM Account Holders Thailand Seminar

Regulated Online Broker

Australia Regulated Forex Broker

Forex Bonus Up To $5000

Silver and Gold

 

Top MQL5 EAs - Access Automated Trading Programs From the MT4 Trading Platform

MQL5 Expert Advisors Library

 

Top MQL5 Signals - Access Top MQL5 Signals From the MT4 Trading Platform

Top MQL5 Forex Signals on MetaTrader 4 Platform

 

Top MQL5 EAs - Access Top MQL5 Signals From the MT4 Trading Platform

Top MQL5 Forex Signals on MQL5 Website

Regulated Broker

 

Top MQL5 EA Robots

Top MQL5 Automated Trading Expert Advisors

Open A Forex Account

Open Demo Account
Open Real Account

Last Call $5K Bonus

Copy Top MQL5 Signals

Top MQL5 Forex Signals Service Providers on MetaTrader 4

XM MQL5 Page

XM MQL5 Signals Page

Top MQL5 Signals

Forex Account

Open Demo Account
Open Real Account