ADX (Average Directional Index)

An indicator of how strong a trend is, not which way it points.

Definition

Developed by J. Welles Wilder, ADX runs from 0 to 100. Readings above roughly 25 are commonly read as a trending market and below about 20 as a range, though traders pick their own thresholds. It rises with strong trends in either direction.

Watch out for

ADX is lagging and says nothing about direction. Pair it with the trend itself.

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