ADX BTCUSD Analysis & ADX Signals

Developed by J. Welles Wilder

This a momentum indicator used to determine the strength of a bitcoin 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 & applying a smoothing function.

The ADX isn't a directional technical indicator but a measure of the strength of the bitcoin trend which has a scale of Zero to 100.

Higher the indicator value the stronger the market trend.

A value of below 20 indicates that the bitcoin market isn't trending but heading in a range.

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

Values above 30 demonstrates a strong trending market.

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

ADX combined with DMI Indicator

Since the ADX alone is a directionless indicator it's combined with the DMI index to determine the direction of the bitcoin.

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 bitcoin trend direction.

Bitcoin Analysis & How to Generate Trade Signals

Buy Signal

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

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

Buy Signal

Sell Signal

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

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

Sell Signal