ADX Metals Analysis & ADX Metals Trade Signals

Created by J. Welles Wilder

This a momentum indicator used to determine the strength of a metals 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 & applying a smoothing function.

The ADX is not a directional technical indicator but a measure of the strength of the metals trend which has a scale of Zero to 100.

Higher the technical indicator value the stronger the trend.

A value of below 20 indicates that the metal market isn't trending but heading in a range.

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

Values above 30 indicates a strong trending market.

When ADX indicator turns down from above 30, it indicates that the current metals trend is losing momentum.

Directional Movement Index Indicator

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

DMI

ADX and DMI Index

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

Metal Trading Analysis & Generating Trading Signals

Buy Trading Signal

A buy metals 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 Trading Signal

Sell Trading 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 Trading Signal