Average Directional Index

The Average Directional Index splits trend analysis into two questions — is this market trending at all, and in which direction? The build plots the full Wilder system: +DI and -DI express upward and downward movement relative to true range, while the ADX line smooths their difference into a pure strength gauge. A dashed Key Level marks the trend-strength threshold. Defaults follow Wilder's originals, 14-period smoothing at both stages — the unmodified standard calculation.

How to Trade the Average Directional Index?

• ADX above the Key Level (default 25): one side is dominating persistently — trend-following entries and breakout continuation carry more weight.
• ADX below the Key Level: no durable dominance; range tactics apply and DI crossovers deserve heavy discounting.
• +DI above -DI: up-moves dominate — direction is up while it holds; a DI cross while ADX rises is the classic entry configuration.
• ADX rolling over from a high reading: dominance fading — contraction, not reversal; price often drifts rather than turns when ADX dies.

ADX climbs in persistent declines just as in persistent advances; the DI lines, not ADX, carry direction. Three alert conditions are included: Bullish DI Cross, Bearish DI Cross, and ADX Above Key Level.

Average Directional Index Settings

• DI Length (default 14): Wilder RMA smoothing applied to directional movement and true range for +DI and -DI. Shorter flips the DI lines faster and multiplies crossovers; longer cuts whipsaw but delays direction changes.
• ADX Smoothing (default 14): the second smoothing pass, from DX to the ADX line — lower registers regime changes sooner at the cost of chop.
• Key Level (default 25): the dashed reference ADX is read against. Toward 30 restricts "trending" to stronger markets; toward 20 flags regimes earlier with more false positives.

Frequently Asked Questions

Does a rising ADX mean price is going up?

No. ADX is direction-blind: it rises whenever either side dominates persistently, so a crashing market can print a soaring ADX. Read direction from the DI pair, whichever is on top, and use ADX only for the strength of that verdict.

Why does ADX react so late?

The value passes through two rounds of Wilder smoothing — once building the DI lines, again turning DX into ADX. That double filter keeps the line readable, but the gauge certifies a trend only once established and calls the range only after it has set in. Use it as a regime filter, not a timing tool.

How do I combine the ADX system with other indicators?

The most common pattern is gating: ADX picks the playbook, other tools execute — trend signals only above the Key Level, mean-reversion only below. The division of labor keeps its lag away from entry timing.