Average Directional Index (ADX)

ADX is a technical indicator designed by Welles Wilder in the late 70s and used initially for commodity charts.

Today it is used on all sorts of assets to determine trend strength. The indicator ranges between values of 0 and 100. Below 20 is seen as a weak trend, above 40 is a strong trend and above 50 is considered a very strong trend.

ADX doesn’t actually say anything about the direction of the trend itself, just how strong it is. Like any other indicator, the Average Directional Index should not be used on its own, but with a combination of price analysis and other indicators that may provide confirmation of its potential signals.

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