ADX Supertrend

The ADX Supertrend indicator is a trend-following tool that integrates the Supertrend and Average Directional Index (ADX) to filter price action and identify high-conviction market trends.

Usage

The Usage section highlights how this tool combines volatility-based trend detection with trend strength filtering.

• Trend Identification: The indicator plots a line on the chart that changes color based on market direction. A green line and candles represent a bullish trend, while a red line and candles represent a bearish trend.
• ADX Filtering: Unlike a standard Supertrend, this version requires the ADX to be above a specific threshold (defaulted to 25) and for the directional indices (+DI/-DI) to align with the Supertrend direction. This ensures that signals are only generated during periods of significant market momentum.
• Confluence Signals: A long signal occurs when the Supertrend turns bullish, the +DI is above -DI, and the ADX is above the threshold. Conversely, a short signal occurs when the Supertrend turns bearish, the -DI is above +DI, and the ADX is above the threshold.

Details

The script uses a smoothed source calculated via a nearest-rank percentile to reduce noise before calculating the Supertrend components. The Supertrend calculation itself relies on the Average True Range (ATR) multiplied by a user-defined factor to create dynamic support and resistance levels. By incorporating the ADX, the script aims to mitigate "whipsaw" signals often found in sideways or ranging markets, only allowing trend changes when the ADX confirms that a trend is strengthening.

Settings

Supertrend Settings

• ATR Length: The lookback period used for the Average True Range calculation.
• Factor: The multiplier applied to the ATR to determine the distance of the trend line from the price.
• Smoothing: Adjusts the percentile-based smoothing of the input source.
• Source: The price data used for calculations (Open, High, Low, Close, etc.).

ADX Settings

• ADX Length: The lookback period for the ADX smoothing.
• DI Length: The lookback period for the Directional Index (+DI and -DI) calculations.
• Threshold: The minimum ADX value required to confirm a trend is strong enough to trigger a signal.

FAQ

How do I use the ADX Supertrend?

You can use it to identify entries in trending markets by looking for color changes in the candles and trend line, ensuring the market has enough momentum to sustain a move.

What does the ADX threshold do?

The threshold acts as a filter; if the ADX is below this value, the indicator will maintain its current state, helping you avoid trading in choppy, low-volatility environments.

How can I access this tool?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.