The Average Directional Index is a directional movement indicator and is used to measure the strength and direction of a trend. It consists of 4 main components, the ADX line, plus DI line, minus DI line and the 20 level. This indicator is used to determine whether the pair is in a range or trending. When the ADX is below 20 it suggests the currency pair is ranging. When it rises above 20 level it suggests the trend is starting. When it is trending you can use indicators like stochastics to do range trading. When it rises above 20 you can look for breakouts and other trend following strategies. Plus DI and minus DI lines are used to determine the direction of the trend.
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Learn Forex Trading — Average Directional Index — ADX
November 13, 2014 at 12:52
by K. Prabhu
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