What it measures
The Directional Movement system, introduced by J. Welles Wilder Jr., compares how far each bar extends beyond the previous bar's high (upward movement) with how far it extends below the previous low (downward movement), relative to the true range.
| Output | Meaning |
|---|---|
plus_di | Strength of upward directional movement (+DI) |
minus_di | Strength of downward directional movement (-DI) |
adx | Smoothed spread between +DI and -DI: how strong the trend is, whichever way it points |
All three use Wilder smoothing over period bars (14 by default) and need at least twice that many bars before they appear. ADX can start later than the directional lines on very quiet histories, because it only counts bars where there was some directional movement.
How to read it
- Trend strength. ADX above about 25 is conventionally read as a trending market, below about 20 as a range. ADX does not show direction.
- Direction. +DI above -DI means upward movement dominates; -DI above +DI, downward.
- Rising ADX. A rising ADX means the trend, up or down, is strengthening; a falling ADX means it is losing force.
Common mistakes
- Reading high ADX as bullish. A strong downtrend also produces a high ADX.
- Trading every DI cross. In ranges, +DI and -DI cross often; many traders only act on crosses when ADX is also elevated.
Use it in a scan
A trending stock with upward movement in control:
adx(14) > 25 and dmi_plus(14) > dmi_minus(14)Inputs
| Input | Type | Default | Range |
|---|---|---|---|
period | integer | 14 | 2 – 300 |
Outputs
adx, plus_di, minus_di