Average directional index
How strong the trend is, from 0 to 100, ignoring direction; +DI and -DI show which side leads.
ADX reads how strong the recent trend is, not which way it points. It compares the up-moves and down-moves in each bar's high and low over the last window bars, then smooths the result with Wilder's method, a slow running average that gives recent bars more weight. +DI and -DI are the smoothed up and down shares of the bar range; ADX is the smoothed gap between them, so it rises when one side clearly dominates.
How to read it
- Each line sits in its own pane below the price, on a 0 to 100 scale.
- ADX above 25 means a trend is under way, in either direction; below 20 means the market is drifting sideways.
- When +DI is above -DI the up-moves lead, and the reverse means down-moves lead. A rising ADX means the lead is strengthening; a falling ADX after a strong run means it is fading.
- On SPY one-minute bars at default settings, ADX stayed mostly between 11 and 47 with a median near 22, so readings above 40 are uncommon.
What it outputs
- ADX
- Trend strength from 0 to 100, ignoring direction. On the sample it ran from about 7 to 71 with a median near 22.
- +DI
- Smoothed up-moves as a share of the average bar range, on a 0 to 100 scale. On the sample it ran from 2.5 to 92, median near 28.
- -DI
- Smoothed down-moves as a share of the average bar range, on a 0 to 100 scale. On the sample it ran from 2 to 94, median near 26.
Settings
- Window
- Bars used for smoothing and averaging. Raising it smooths and slows all three lines, so ADX takes longer to climb past 25 and to fall back. Lowering it makes them jumpier. The first two windows of bars stay blank.
Pitfalls
- ADX never says which way price is heading. A reading of 50 can be a strong rally or a strong sell-off, so check +DI against -DI first.
- On one-minute bars the default 14 covers only 14 minutes, not the 14 days most textbooks mean, so the lines react to short bursts and read noisier than daily charts.
- The first values appear only after about two windows of bars; at default settings roughly 26 of the 20,160 sample bars were blank, all at the start.