ADX and DI lines crossover
- Observe the crossover of DI lines (Directional Indicator)
- DI lines are +DI and -DI.
- When +DI crosses -DI then it signals buying opportunity
- When -DI crosses +DI then it signals a selling opportunity
- ADX only measures the strength of a trend, not its direction (very important)
- Whenever DI+ crosses DI- then it is a buying signal, provided ADX is above 20
- ADX value below 20 is a nonexistent trend
- ADX value above 20 is a practical trend for trade
- Exit whenever ADX falls below 20
Here you can observe Whenever +DI crosses -DI it is time for buying and When +DI crosses -DI time for shorting, stronger only when ADX is above 20 (Yellow Line moving up)- ADX Slope and momentum: Rising ADX slope indicates that the trend is gaining momentum, offering a potentially favorable entry point. On the other hand a declining ADX slope suggests that the trend is losing momentum signalling a possible exit
When ADX rises, it is not a trend direction, it is momentum strength.- Combining ADX with MA determines good trend's direction and helps us to position long or short
- Consider if the price is above MA and the ADX is above 20, then we are in a long position.
- If the price is below MA and ADX is above 20, then we can plan at short position
No comments:
Post a Comment