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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.

ADX XAUUSD Indicator Technical Analysis



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.

ADX XAUUSD Indicator combined with DMI- Directional Movement Index

DMI



ADX and DMI Index

ADX XAUUSD Indicator 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.


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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.

ADX Indicator - Buy XAUUSD Trading Signal

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.

ADX Indicator - Sell XAUUSD Trading Signal

Sell Gold Trading Signal

 

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