Average Directional Movement Index - ADX Expert Advisor Setup - Setting Up Average Directional Movement Index - ADX Expert Advisor
Average Directional Movement Index - ADX Expert Advisor Setup - Setting Up Average Directional Movement Index - ADX Expert Advisor - A trader can come up with an Average Directional Movement Index - ADX Expert Advisor based on the awesome indicator explained below.
Average Directional Movement Index - ADX Expert Advisor rules can be combined with other Forex technical indicators to come up with other EA Robots that trade using rules based on two or more indicators combined to form a trading system.
Average Directional Movement Index - ADX Forex Technical Analysis Signals
Developed by J. Welles Wilder
This a momentum indicator used to determine the strength of a price trend: it's derived from the DMI - Directional Movement Index which has 2 lines.
+DI - Positive Directional Movement Index
–DI - Negative Directional Movement Index
ADX is calculated by subtracting these 2 values & applying a smoothing function.
The ADX isn't a directional technical indicator but a measure of the strength of the trend which has a scale of Zero to 100.
Higher the technical indicator value the stronger the market trend.
A value of below 20 indicates that the market is not trending but heading in a range.
A value of above 20 confirms a buy or sell signal and indicates a new trend is emerging.
Values above 30 indicates a strong trending market.
When ADX indicator turns down from above 30, it signifies that the current trend is losing momentum.
ADX combined with DMI - Directional Movement Index Indicator
Since the ADX alone is a directionless indicator it's combined with the DMI index to figure out the direction of the currency pair.
DMI
ADX and DMI Index
When the ADX is combined with DMI index a trader can figure out the direction of the trend and then use the this indicator to determine the momentum of the prevailing trend direction.
FX Technical Analysis & How to Generate Signals
Buy Trading Signal
A buy signal is generated when +DI is above –DI, and the ADX technical indicator is above 20
The Exit signal is generated when indicator turns down from above 30.
Buy Forex Signal
Sell Trading Signal
A short signal is generated when –DI is above +DI, and the ADX technical indicator is above 20
The Exit signal is generated when indicator turns down from above 30.
Sell Forex Signal
