Is ADX Technical Indicator a Leading or a Lagging Indicator?

ADX Analysis and ADX Signals

Developed by J. Welles Wilder

This a momentum trading indicator used to measure the momentum 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 & applying a smoothing function.

Average Directional Index (ADX) - ADX Indicator Analysis - ADX Indicator MT4 - Best Indicator for 1 Minute Chart

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

Higher the trading indicator reading the stronger the market trend.

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

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

Values above 30 demonstrates a strong trending market.

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

ADX combined with DMI - Directional Movement Index Indicator

Since the ADX alone is a directionless indicator it's combined with the DMI index to figure-out the direction of the currency pair.

ADX Indicator Combined with DMI - Directional Movement Index Indicator Analysis - ADX Indicator Analysis

DMI

ADX & DMI Index

ADX Trading indicator & DMI Index Indicator Example Explained - ADX Indicator

When the ADX is combined with DMI index one can determine the direction of the market trend and then use the this trading indicator to determine the momentum of the current trend direction.