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.

RELATED TERMS
  1. Average Directional Index - ADX

    The average directional index (ADX) is an indicator of objective ...
  2. Direct Cost

    A direct cost is a price that can be completely attributed to ...
  3. Direct Tax

    A direct tax is a tax paid directly by an individual or organization. ...
  4. Monti Bond

    Monti bonds are hybrid securities authorized by the Italian Treasury ...
  5. Parabolic Indicator

    The parabolic indicator, developed by J. Wells Wilder, is used ...
  6. Volume Price Trend Indicator - ...

    The volume price trend (VPT) indicator helps determine a security’s ...
Related Articles
  1. Tech

    The Most Important Technical Indicators For Binary Options

    Trading binary options is not for the novice, but if you're ready to delve in, get to know the best technical indicators.
  2. Trading

    The Bulls Are Back on Apple Stock

    Technical signs point to a rally for Apple stock going into its next earnings report.
  3. Trading

    Finding Market Movement With The ADX

    Take a closer look at this indicator, which refines your insight into the strength of a prevailing trend.
  4. Trading

    Trading Without Noise

    False signals can drown out underlying trends. Find out how to tone them down and tune them out.
  5. Trading

    Use The Momentum Strategy To Your Advantage

    Learn how to use a number of different indicators to know when to make your trading moves.
  6. Investing

    Charging Bull: The Bronze Icon of Wall Street

    Weighing more than three and a half tons and measuring 18 feet long, 'Charging Bull' near Wall St. began as a bizarre stealth gift—and initially, an unwelcome one.
  7. Investing

    How to Predict Where the Market Will Open

    Find out how some indicators help investors predict the likely opening direction of stocks. Also, determine how international markets influence the open.
  8. Investing

    Simple Strategies For Capitalizing On Trends

    Find out how following a trendline bounce or a new swing high or low can help you get into a trend early.
RELATED FAQS
  1. How is the Average Directional Index (ADX) calculated, and what is the formula?

    Learn about average directional index (ADX) and its indicators, including the calculations for various elements of the ADX ... Read Answer >>
  2. What are the top technical indicators used for range-bound trading strategies?

    Learn how to identify when a market is range-bound and what some of the technical indicators are that work best for trading ... Read Answer >>
  3. How can I purchase stock directly from a company?

    There are a few circumstances in which a person can buy stock directly from a company, including direct stock purchase plans, ... Read Answer >>
  4. Is a Slow Stochastic Effective in Day Trading?

    The good news is that most technical indicators can be adjusted to be of value to a day trader. Read Answer >>
  5. What are leading, lagging and coincident indicators?

    Leading indicators move ahead of the economic cycle, coincident indicators move with the economy, and lagging indicators ... Read Answer >>
  6. What is the prime cost formula?

    Prime costs are the costs directly attributed to the production of a product. Before calculating prime costs, direct costs ... Read Answer >>
Trading Center