Average Directional Index (ADX)

The Average Directional Index (ADX) helps traders determine the strength of a trend, not its actual direction. It can be used to find out whether the market is ranging or starting a new trend. Its related to the Directional Movement Index (DMI) and, in fact, the latter has the ADX line included. The oscillator ranges between 0 and 100 with high readings indicating a strong trend and low readings indicating a weak trend. It is often combined with directional indicators. The indicator was developed by Welles Wilder, who created several core trading indicators.



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