ADX + DI x Upgraded to Pine v4 x KingThies

Average Directional Movement Index
  • Momentum based tool to measure trend strength on scale of 1-100
  • Similar to the aroon but incorporates a 3rd measure, while aroon uses two
  • The majority of these calculations were pre-existing in older pine scripts but have since been updated
  • signals are given when -DI and +DI cross, ADX illustrates corresponding strength at time of cross

Full Intro
ADX can help investors to identify trend strengths, as di - di determines the trend direction, while d - d is an impulse indicator. If the ADX is below 20, it can be considered impulsive, while it is above 25 on a trend line .
A trading signal can be generated when the di - DI line is switched to d - d and vice versa. If the di-line crosses and the ADX is above 20 (ideally 25), a potential buy signal could ebb away.
If the ADX is above 20, there is the possibility of potential short selling if the DI crosses over DI. You can also use crosses to get out of the current deal if you need it for a long time.
If the di-line is crossed and the Adx is below 20 (or 25), there may be opportunities to enter the potential for short trading, but only if di are above or below DI or if the price is trendy and may not prove to be the ideal time to start trading.

Eric Thies

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