The Average Directional Index (ADX) is a technical analysis indicator used to measure the strength of a trend in a financial market. Developed by J. Welles Wilder, the ADX is typically displayed as a single line that ranges from 0 to 100. A reading above 20 or 25 generally indicates a strong trend, while a reading below suggests a weak trend or a ranging market. The ADX does not indicate trend direction: only momentum strength. Traders often use the ADX in conjunction with other indicators, such as the Positive Directional Indicator (+DI) and Negative Directional Indicator (−DI), to determine entry and exit points in their strategies. It's commonly employed across various trading disciplines including Forex, stocks, and commodities.
