LG on the Directional Movement Indicator, (DMI & ADX)
I use the DMI (Direction Movement Indicator) which includes the ADX.
The DMI indicator calculates and plots the DMI Plus and DMI Minus values. DMI Plus is calculated from a comparison of the highs on a series of consecutive bars versus the true range; DMI Minus is calculated from the lows on a series of consecutive bars versus the true range. These values are used to calculate ADX, which is also plotted by this indicator. ADX is commonly used to indicate whether a market is trending. Rising ADX values indicate a trending market without indication of the trend direction, but IMO correlates to the dominant trend. The DMI Plus and DMI Minus, components of the ADX, can aid in identifying direction. DMI Plus crossing over DMI Minus is a bullish sign, and vice versa.
As mentioned in previous posts about the DirMov Indicator, I primarily use the ADX in concert with my other indicators. It helps identify momentum peaks for both the dominant trend and the subordinate trend. Per my settings, the ADX often begins to top out at or near short to medium-term reversal points for the dominant trend, which for the last few years has been down, thus the ADX has helped to identify, lows. Prior to 2000 the dominant trend was up.
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