ADX (Average Directional Index)

ADX, developed by J. Welles Wilder, is a trend strength indicator measuring trend intensity rather than direction. ADX is typically used with +DI (Positive Directional Indicator) and -DI (Negative Directional Indicator), where +DI and -DI indicate trend direction while ADX indicates trend strength.

Types

ADX is primarily used to identify whether market is trending, helping traders select appropriate strategies. When ADX > 25, use trend-following strategies; when ADX < 20, use range-trading strategies. ADX cannot be used alone; must combine with +DI/-DI or other indicators to determine trade direction. Rising ADX indicates current trend (whether up or down) is strengthening, signal to hold positions.