ADX CFDs Technical Analysis & ADX CFDs Signals
Developed by J. Welles Wilder
This a momentum indicator used to determine the strength of a cfd price trend: it is derived from the DMI - Directional Movement Index which has two lines.
+DI - Positive Directional Movement Index
-DI - Negative Directional Movement Index
ADX is calculated by subtracting these two values and applying a smoothing function.
The ADX is not a directional technical indicator but a measure of the strength of the cfd trend which has a scale of Zero to 100.
The higher the technical indicator value the stronger the trend.
A value of below 20 indicates that the cfd market isn't trending but moving in a range.
A value of above 20 confirms a buy or sell cfd signal & indicates a new cfd trend is emerging.
Values above 30 signifies a strong trending market.
When ADX indicator turns down from above 30, it indicates that the current cfd trend is losing momentum.
ADX combined with DMI Technical Indicator
Since the ADX alone is a directionless indicator it is combined with the DMI index to determine the direction of the cfd.
DMI
ADX and DMI Index
When the ADX is combined with DMI index a trader can figure out the direction of the cfd trend and then use the this indicator to determine the momentum of the prevailing cfd trend direction.
CFDs Technical Analysis & How to Generate CFDs Signals
Buy CFDs Signal
A buy cfd signal is generated when the +DI is above -DI, and the ADX trading technical indicator is above 20
The Exit trading signal is generated when the indicator turns down from above 30.
Buy CFDs Signal
Sell CFDs Signal
A short signal is generated when the -DI is above +DI, and the ADX trading technical indicator is above 20
The Exit trading signal is generated when the indicator turns down from above 30.
Sell CFDs Signal
