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.

ADX Automated Robot EA - ADX Automated Expert Advisor

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.

ADX Indicator Combined with Directional Movement Index DMI Indicator Technical Analysis

DMI

ADX and DMI Index

ADX Indicator and DMI Index Indicator Example Explained

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.