The ADX: the strength of a move
The strength of a move on a real chart
InteractiveClick any session: the page gives you that day's three numbers — +DI, −DI and the ADX — and what they say together.
It measures strength, not direction
This is the commonest misunderstanding, and it is worth clearing up first: a rising ADX does not mean a rising price. It means the move under way — up or down — is going with conviction. A decisive fall lifts the ADX exactly as a decisive rise does.
Fig. 1 · The same ADX, two opposite directions
- In the first half price rises and the ADX rises with it. So far it all looks natural: the more decisive the move, the higher the blue line climbs.
- In the second half price falls, and the ADX rises again all the same. This is where anyone mistaking it for a direction indicator trips up: a decisive fall lifts it just as a decisive rise does.
- The ADX has no sign. There is no "negative" reading for falls: it runs from 0 to 100 and measures one thing only, how much strength the move under way has.
Direction, when you need it, comes from the two lines that travel with the ADX: +DI and −DI. On its own the ADX answers a single question — does this move have strength? — and on that it is precise.
Where the ADX comes from
The starting point is directional movement: between two sessions you look at how far the high rose and how far the low fell. The larger of the two wins and the other counts as zero: a session is either more up or more down, not both.
Fig. 2 · Directional movement between two sessions
- +DM is how far today's high is above yesterday's. If today's high is lower, +DM is zero: backward moves are not counted.
- −DM is how far today's low is below yesterday's. Same rule, the other way round: if today's low is higher, it is zero.
- Only the larger of the two counts. A session is either more up or more down, not both: the other movement is zeroed, and that rule is what gives the indicator its name.
The two movements are divided by the session's true range and become +DI and −DI, two numbers between 0 and 100. The distance between them, again as a percentage, is the DX. The ADX is the smoothed DX: Wilder's average, which does not start over each time but sheds one nth and adds the new value.
Fig. 3 · Wilder's smoothing
- The raw DX jumps from one session to the next. On its own it is unreadable: it swings twenty points in two days without the market having changed.
- Smoothing calms it. Wilder's average does not start over each time: it sheds one nth and adds the new value, so the line moves slowly and can be read.
The arithmetic, step by step
Here are the first three NVIDIA sessions where the ADX exists: it takes 14 warm-up sessions first, because the smoothing needs a base to start from.
| Session | Close | +DI | −DI | DX | ADX |
|---|---|---|---|---|---|
| $138.27 | 19.8 | 20.7 | 2.1 | 11.2 | |
| $144.43 | 26.4 | 18.8 | 16.7 | 11.6 | |
| $149.39 | 33.4 | 16.9 | 32.9 | 13.1 |
+DI and −DI are read together: when the first is above the second the move is upward, when it is below it is downward. The DX only measures how far apart they are, and the ADX smooths it.
The threshold: above and below
A convenient number is used — usually 25 — to say "here the move has strength". It is not a law of nature: it is a convention born with the indicator and never dropped. Above that line price tends to go one way; below it, it goes a bit this way and a bit that.
Fig. 4 · The threshold on the ADX chart
- Above the threshold the move has a direction and keeps it. Long runs above that line are the stretches where price actually goes somewhere.
- Below the threshold the moves cancel each other out. Price still moves, but one day this way and one day that: it is the picture of a market that cannot decide.
1ADX above the threshold
- The move under way is decisive, up or down.
- Long runs above the threshold are the most directional stretches.
2+DI and −DI
- These are the two lines that say which way the move is going.
- The ADX does not replace them: they are read together.
Direction comes from +DI and −DI
The upper and lower lines measure how much of the range is made of upward movement and how much of downward. When they cross, the weight has moved from one side to the other.
Fig. 5 · The crossing of the two lines
- +DI above −DI: upward movement weighs more. It means that in the range of the last sessions the rising part has been the larger one.
- −DI above +DI: downward movement weighs more. The two lines are always read together, never one alone.
- The crossing says the weight has changed, not that price will. It measures what has already happened: like the rest of the indicator, it arrives afterwards.
Anyone using this indicator reads the three lines together: the ADX to know whether there is strength, the other two to know which side it is on. A low ADX with two DI lines crossing over and over is the picture of a market going nowhere.
Find a move with strength
Click a session on the chart where the move had strength, that is with the 14-session ADX above 25. The page tells you whether you got it and why.
Click a session on the chart above.
What the ADX does not say
It does not say where price is going. It says the move happening now is decisive. A decisive move can end tomorrow, and the ADX only notices while it falls — that is, afterwards.
It lags, by construction. It is a smoothed average of a smoothed average: it gains in readability what it loses in promptness. Anyone watching it knows that and uses it for what it is, not as an entry signal.
Deeper dives: the trend · the RSI · the moving average · support and resistance · trading volume · the stop loss.
Where to go from here
The indicators · Trend and rangesThe other lessons in the guide
What is technical analysis
- the study of price and volume to recognise the trend and the levels
- three premises: price discounts everything, trends, history repeats
- exercise: uptrend, downtrend or sideways on three real charts
Candlestick chart
- the four prices of a session: body and shadows
- green and red, long and short bodies, long shadows, the doji
- find the candle on a real chart: the judge says yes or no with the numbers
Uptrend: higher highs and higher lows
- higher highs and higher lows: how to recognize an uptrend
- swing points, and the two signals that end a trend
- mark the higher lows yourself on a real chart
Support and resistance
- the level where the decline stopped, and the one where the rise stopped
- touches, time and volume: how much a level counts; once broken, it switches roles
- find the level yourself on a real chart: the judge counts the touches
Frequently asked questions
What does the ADX measure?
It measures the strength of the move under way, not its direction. A rising ADX says price is moving decisively, whether it is going up or down. Direction comes from the two lines that travel with it, +DI and −DI.
What does ADX above 25 mean?
It is the most common convention for saying the move has a recognisable direction. Twenty-five is nothing special: it is a convenient number, and some people who use the indicator prefer twenty. Below that line moves tend to cancel each other out.
How is the ADX calculated?
You measure how far the high rises and the low falls between two sessions, keep only the larger of the two, divide by the true range, and get +DI and −DI. The distance between them as a percentage is the DX, and the ADX is the DX smoothed with Wilder's average, usually over fourteen sessions.
Does the ADX tell you when to buy?
No, and this page does not teach that. The ADX lags by construction: it describes the move that has happened. It is useful for telling whether you are looking at a directional stretch or a confused one, not for deciding a trade.
Method and sources
| Source |
|---|
| J. Welles Wilder, New Concepts in Technical Trading Systems (1978) |
The NVIDIA prices run from to : real sessions from our archive, over a fixed window. The sessions before the start are the smoothing's warm-up and are not shown. This guide explains how the tools work: it does not contain investment recommendations and promises no returns. Our method · license · report an error.
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