Definition of ‘Average Directional Index – ADX’
An indicator used in technical analysis as an objective value for the strength of trend. ADX is non-directional so it will quantify a trend’s strength regardless of whether it is up or down. ADX is usually plotted in a chart window along with two lines known as the DMI (Directional Movement Indicators). ADX is derived from the relationship of the DMI lines.
Analysis of ADX is a method of evaluating trend and can help traders to choose the strongest trends and also how to let profits run when the trend is strong.