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What is ADX?
ADX Indicator
The Average Directional Index (ADX) is an indicator that measures the strength of a trend developed by J. Welles Wilder. Like RSI, it tells you how strong the current trend is rather than direction (up/down).
ADX consists of three lines:
- +DI (positive directional index): Uptrend strength
- -DI (Negative Directional Index): Downtrend strength
- ADX (Average Directional Index): Overall trend strength (regardless of direction)
ADX numerical analysis
| ADX figures | Trend Strength | Trading Approach |
|---|---|---|
| 0~25 | Weak trend/sideways | ❌ Trend following not recommended |
| 25~50 | Medium trend | Trend following possible |
| 50~75 | Strong Trend | Optimal for trend following |
| 75~100 | Very strong trend | Follow carefully |
ADX 25 or higher = Confirmation of trend existence → Activation of trend-following strategies such as Bollinger Bands and moving averages ADX below 25 = sideways market → Activate countertrend strategies such as Stochastic and CCI
+DI / -DI cross signal
| Situation | signal |
|---|---|
| +DI breaks above -DI | 🟢 Uptrend reversal → Long |
| -DI breaks above +DI | 🔴 Downtrend reversal → short |
Caution: DI cross alone is not reliable. Significant signal only when ADX is above 25.
Strong signal:
+DI > -DI cross + ADX above 25 + rising = strong long signal
-DI > +DI cross + ADX above 25 + decline = strong short signal
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ADX utilization strategy
Strategy 1: Determine market conditions with ADX and select appropriate strategy
ADX < 25: Sideways market
→ Use Bollinger Band mean reversion and stochastic reversal strategy
ADX 25-50: Medium trend
→ Use EMA cross, supertrend, MACD cross
ADX 50+: Strong Trend
→ Trend following only, no entry into countertrends
Strategy 2: ADX + EMA combination
Price above ADX 30 + EMA 50 above:
→ Confirm strong upward trend → Enter long upon adjustment
Prices above ADX 30 + below EMA 50:
→ Confirm strong downward trend → Enter short in case of rebound
Related guides
- Supertrend and ADX combination →
- EMA moving average →
- Bollinger Bands →
- Liquidation price calculator →
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