Average Directional Index - ADX

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DEFINITION of 'Average Directional Index - ADX'

An indicator used in technical analysis as an objective value for the strength of trend. ADX is non-directional so it will quantify a trend's strength regardless of whether it is up or down. ADX is usually plotted in a chart window along with two lines known as the DMI (Directional Movement Indicators). ADX is derived from the relationship of the DMI lines.

Average Directional Index (ADX)

INVESTOPEDIA EXPLAINS 'Average Directional Index - ADX'

Analysis of ADX is a method of evaluating trend and can help traders to choose the strongest trends and also how to let profits run when the trend is strong.

RELATED TERMS
  1. Indicator

    Statistics used to measure current conditions as well as to forecast ...
  2. Trend

    The general direction of a market or of the price of an asset. ...
  3. Reversal

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  4. Directional Movement Index - DMI

    An indicator developed by J. Welles Wilder for identifying when ...
  5. Uptrend

    Describes the price movement of a financial asset when the overall ...
  6. Downtrend

    Describes the price movement of a financial asset when the overall ...
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