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Average Directional Index (ADX) – Can it Be Utilized to Trade Forex Profitably?

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adx

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currency trading

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As technical tools and indicators go, the ADX frequently gets lost in the weeds compared to the more popular MACD, RSI and Stochastics. However, if used correctly the ADX can be a big help in trading the Forex profitably. The Average Directional Index was established by Welles Wilder, a prolific researcher and author on the monetary markets. Investopedia describes the ADX as an indication that is "utilized to identify when cost is trending highly". There are 3 elements to the ADX: the DI+ line informs us when there is a positive, upward pattern widespread in an offered market; conversely the DI- line tells us when there is an unfavorable, downward pattern. The last component is the ADX line itself which tells us the strength of the trend.