Average Directional Index (ADX) is used to assess trend strength, not whether price is moving up or down. The +DI and −DI lines compare positive and negative directional movement. Read them alongside ADX and the price chart rather than treating any one line as a standalone trading signal.
Reading ADX in context
Use a consistent setting when comparing a chosen asset and timeframe. A rising or falling ADX can help describe changes in trend strength; +DI relative to −DI may help describe directional movement. Also review price, volume and relevant news because indicators are calculated from historical data.
Test before drawing conclusions
- Choose an asset and timeframe and keep the indicator settings consistent.
- Compare ADX and the DI lines with the price chart.
- Test any proposed rule across multiple periods and include fees and slippage.
- Record losses as well as gains.
Example thresholds are not universal rules, and past results do not guarantee future performance. This article explains an indicator; it does not give entry or exit signals or promise profit.
Reference
StockCharts ChartSchool: Average Directional Index (ADX)
Source video: Measuring trend strength with ADX