For ADX installation on graphic, we will press the button Indicators at a toolbar and we will select from the appeared menu Trend - Average dirActional moovement Index
After that, there will be a window where we can change properties of the exposed indicator. We can select the averaging period, a method, and also visual settings.
In a method we specify the prices to which the indicator is used. These are the prices of closing, opening, a maximum, a minimum or their different sheaves.
ADX is used alone seldom. Usually it serves for determination of a phase of the market (a trend or a flat).
Further, in case of a trend, trend indicators (for example, averages) are used. In case of a flat, oscillators are used - we will speak about them further.
This indicator passed to us from the commodity markets, and in the market Forex it is applied seldom. Nevertheless, it can quite work as addition in different systems of trade.
Falling ADX says about the side market and that it is necessary to enter against the market, using oscillators (such, as Stochastics, MAKD, P Xi Ai).
Growing ADX with value above 15 often testifies about a trend.
On ADX graphics we see three lines. The blue line, is ADX.
Two dotted lines, are, correspondently, DI + and DI-(Directional movement) on which ADX is calculated.
We will dwell on these lines. On a graphic all possible options of relation of the ceiling and minimum prices between two bars and a technique of determination of DI for each of cases are provided.
From result of computation of DI it is possible to draw outputs about trend existence (directional movement) or that absence. It is clear that in the market moving up, DI + will increase, and DI-to decrease.
In the falling market, DI-will increase, and DI+ will decrease.
Each of DI is a measure of directional movement in each side.
In other words, if DI + crosses DI-from below up, in the market bulls are in the lead and the price goes tends to increase.
If DI-starts prevailing over DI +, it means the sellers are in work and the market is ready to move down.
Следовательно, пересечение DI+ и DI- считается сигналом к совершению сделки.