Average Directional Index

Categories: Technical Analysis,

ADX. An indicator used in technical analysis that shows strength of a trend. It smoothes the difference between the negative directional indicator (-DI) and positive directional indicator (+DI), and is on a scale of 0 to 100. Index values above 40 indicate that the particular trend is strong, while values less than 20 indicates that a trend is weak and that an investor should not use a trend following system. The index only shows the strength of the trend, not whether or not it is trending upwards or downwards.