What is the 'Positive Directional Indicator (+DI)'

The Positive Directional Indicator (+DI) is a component of the Average Directional Index (ADX) and is used to measure the presence of an uptrend. When the +DI is sloping upward, it is a signal that the uptrend is getting stronger. This indicator is nearly always plotted along with the Negative Directional Indicator (-DI).

BREAKING DOWN 'Positive Directional Indicator (+DI)'

The Positive Directional Indicator is a trendline that was developed by Welles Wilder as part of his methodology for the Average Directional Index. When charting ADX on a technical chart, traders will see three trendlines which comprehensively work together to indicate trading signals. These three trendlines include the Average Directional Index, Positive Directional Index and Negative Directional Index.

StockCharts.com breaks down the calculations for the Average Directional Index, Positive Directional Indicator and Negative Directional Indicator here. These calculations are programed by charting software systems to draw the Average Directional Index, Positive Directional Indicator and Negative Directional Indicator for display together in their own chart window.

Average Directional Index (ADX)

The Average Directional Index is derived from Wilder’s Directional Movement Index which is a component of the methodology that also utilizes the +DI and -DI. The Average Directional Index is used to provide an indicator for the strength of an occurring trend. Wilder reported that a strong trend can be evident when the Average Directional Index is greater than 25 however most chartists believe that an Index value above 20 can signify a strong trend.

Positive Directional Indicator (+DI)

The +DI is based around following the current high minus the prior high of a security’s price over a 14-day period. When the current high minus the prior high is greater than the prior low minus the current low there is said to be positive directional movement which influences the calculation of the +DI. Traders will typically follow the position of +DI versus -DI. When +DI is greater than -DI there is said to be a bullish trend. Thus, when +DI crosses above -DI it is a signal of the beginning of an uptrend.

Negative Directional Indicator (-DI)

The -DI is based around following the prior low minus the current low of a security’s price over a 14-day period. When the prior low minus the current low is greater than the current high minus the prior high then there is said to be negative directional movement which influences the calculation of the -DI. Traders will typically also follow the position of -DI versus +DI. When -DI is greater than +DI then there is said to be a bearish trend. Thus, when -DI crosses above +DI it is a strong signal of the beginning of a downtrend.

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