ADX Gold Trading Analysis and ADX Gold Trading Signals

Developed by J. Welles Wilder

This a momentum indicator used to determine the strength of a gold 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 indicator but a measure of the strength of the gold trend which has a scale of Zero to 100.

The higher the indicator value the stronger the trend.

A value of below 20 indicates that the xauusd market is not trending but moving in a range.

A value of above 20 confirms a buy or sell gold signal and indicates a new gold trend is emerging.

Values above 30 signifies a strong trending market.

When ADX turns down from above 30, it signifies that the current gold trend is losing momentum.

Directional Movement Index

Since the ADX alone is a directionless indicator it is combined with the DMI index to determine the direction of gold.

DMI

ADX and DMI Index

When the ADX is combined with DMI index a gold trader can determine the direction of the gold trend and then use the this indicator to determine the momentum of the prevailing gold trend direction.

XAUUSD Trading Analysis and Generating XAUUSD Trading Signals

Buy Gold Trading Signal

A buy gold signal is generated when the +DI is above –DI, and the ADX is above 20

The Exit signal is generated when the indicator turns down from above 30.

Buy Gold Trading Signal

Sell Gold Trading Signal

A short signal is generated when the –DI is above +DI, and the ADX is above 20

The Exit signal is generated when the indicator turns down from above 30.

Sell Gold Trading Signal