ADX and DMI: How Strong Is the Trend?
+DI and −DI show direction, ADX shows strength: only when ADX is above 25 is there usually a trend.
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Text version · Trend Indicators, lesson 6: “ADX and DMI: How Strong Is the Trend?”
+DI and −DI show direction, ADX shows strength: only when ADX is above 25 is there usually a trend.
ADX: strength only
ADX measures how strong a trend is, regardless of direction: above 25 usually counts as trending, below 20 as ranging. ADX rises in downtrends too.
+DI / −DI: direction only
In DMI, +DI on top means bulls are in control, −DI on top means bears are. Use ADX to judge "is there a trend?" first, then DI for "which way?"
What an ADX turn tells you
ADX falling from a high level means the trend is weakening, but that's not a reversal: you still check DI for direction. ADX turning up again from a low level may mean a new trend is brewing. The default period is 14 bars.
Key takeaways
- +DI > −DI: buyers have the upper hand; −DI > +DI: sellers do.
- ADX measures only trend strength, not direction. Usually > 25 means a trending market and < 20 a ranging one; the default period is 14.
- ADX falling from a high level means the trend is weakening, not reversing; ADX turning up from a low level may mean a new trend is forming.
- Use ADX as a filter: use trend indicators when there's a trend, and less when there isn't.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Click "Example 1: ADX = 12": what color is the background? What state is the market in?
- Click "Example 2": ADX rises from about 15 to 40. Which DI is on top at the same time? What does that tell you?
- Switch between "Up" and "Down": did ADX rise in both? What do you look at to tell up from down?
- Change the period from 14 to 7 and to 28: how does ADX's reaction speed change?
Quiz and explanations
- 1. ADX = 12. The market is most likely…
- Answer: Ranging, with no clear trend.ADX below 20 usually means there's no trend.
- 2. ADX rises from 15 to 40 while −DI > +DI. What does that mean?
- Answer: A downtrend is strengthening.ADX sets the strength, DI sets the direction.
- 3. ADX drops from 45 to 30 while +DI stays above −DI. What does that mean?
- Answer: The uptrend is still there, but losing strength.ADX is still above 25, so the trend is intact; it's falling, so strength is fading. Direction still comes from DI, and buyers are ahead here.