ADX MetaTrader 4 Technical Indicator and ADX Signals
Developed by J. Welles Wilder
This a momentum MT4 Indicator used to determine the strength of a price trend: it's derived from the DMI - Directional Movement Index which has 2 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 MT4 Indicator but a measure of the strength of the trend which has a scale of Zero to 100.
The higher the MT4 Indicator value the stronger the 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 trend is emerging.
Values above 30 indicates a strong trending market.
When ADX indicator turns down from above 30, it signifies that the current trend is losing momentum.
ADX combined with DMI - Directional Movement Index Indicator
Since the ADX alone is a directionless MT4 Indicator it is combined with the DMI index to determine the direction of the currency pair.
DMI
ADX & DMI Index
When the ADX is combined with DMI index a trader can figure out the direction of the trend and then use the this MT4 Indicator to determine the momentum of the prevailing trend direction.
MT4 Indicator and How to Generate Signals
Buy Trading Signal
A buy signal is generated when +DI is above –DI, and the ADX technical indicator is above 20
The Exit signal is generated when the MT4 Indicator turns down from above 30.
Buy Forex Signal
Sell Trading Signal
A short signal is generated when –DI is above +DI, and the ADX technical indicator is above 20
The Exit signal is generated when the MT4 Indicator turns down from above 30.
Sell Forex Signal
