Average Directional Index

This article is not finished…

Name: Average Directional Index (ADX)
Category:
Type:
Favorite Strategy: predictive
Default Settings: 14, 14
Gotcha: produces false signal when…
Time Period(s):

What does ADX do.
The ADX value is high when the market is trending (higher or lower) and low when the market is in congestion. As such, the indicator attempts to define the current market’s trendiness over the past n-periods into one simple value. ADX is not indicative of the direction of a trend, as the indicator itself trends up regardless of the market trending strongly up or strongly down.

What is ADX made out of.
Graphic needed…

How to read ADX.

Bullish & Bearish at a Glance.

Bullish bull: when the ADX line crosses above the zero line.

Bearish bear: when the ADX line crosses below the zero line.

Bullish bull: when the ADX line crosses above the signal line.

Bearish bear: when the ADX line crosses below the signal line.

Note: At least put the case to buy or sell as told by any indicator into context with trend, support & resistance, volume, momentum, etc.

I do not trade anymore based on signals from most indicators. Want to know what I am up to?

Adopt ADX to different time frames and/or strategies.
Soon…

What ADX is not.
Soon…