ADX, ADXR Interpretation:
DI+ represents buying pressure and DI- selling pressure. When Di+>di- it is a bullish signal and when Di- ADX and ADXR are two indicators of movement. A trending market occurs when ADX or ADXR rises above the 17 or 23 level.
It is possible to determine the entry and exit signals when +DI and -DI cross.
When ADX or ADXR rises above the 17 or 23 level there is a trend, a buy or sell signal is given by the crossing of DI+ and DI-. If ADX and ADXR rises above the 17 or 23 level, there is no trend. It is also worth watching when ADX falls below ADXR because the market trend is almost complete.
ADX, ADXR Calculation:
We first calculate +DM and -DM ( the directional movement), the number of points obtained in a direction. We apply a wider moving average on +DM and -DM. Then we calculate DX. DX=100((=DI)-(-DI)/((+DI)+(-DI)).
Finally to obtain ADX we apply again a wider moving average on DX.
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