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NIFTY

8389.65      -23.15 -0.28%

BANK NIFTY

19028.65      -67.80 -0.36%
ACC 1317.30 (-1.03%) Link
Symbol     LTP Chng%
JBFIND 253.00   + 12.27
BALKRISIND 1191.25   + 10.16
TTKPRESTIG 5871.50   + 4.68
SONATSOFTW 205.90   + 4.60
POLARIS 168.30   + 4.53
Symbol     LTP Chng%
DEEPAKFERT 268.45    -4.52
IL&FSTRANS 113.25    -2.87
TV18BRDCST 36.75    -2.78
FORTIS 186.30    -2.66
RELIANCE 1047.70    -2.65
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Average Directional Index (ADX)

Introduction

ADX is an indicator used in technical analysis as an objective value for the strength of trend. ADX is non-directional indicator, so it will quantify a trend's strength regardless of whether its value is up or down. ADX is usually plotted in a chart window along with two lines known as the DMI (Directional Movement Indicators). ADX is derived from the relationship of the DMI lines.

Analysis of ADX is a method of evaluating trend and can help traders to choose the strongest trends and also how to let profits run when the trend is strong.

Formula

First Adx14 = 14 Period Average of DX
Second Adx14 = ((First Adx14 * 13) + Current DX value) / 14
Subsequent ADX14 = ((Prior ADX14 * 13) + Current DX Value) / 14

Advantage

The Average Directional Index (ADX) is used to measure the strength or weakness of a trend, not the actual direction. Directional movement is defined by +DI and -DI. In general, the bulls have the edge when +DI is greater than - DI, while the bears have the edge when - DI is greater. Crosses of these directional indicators can be combined with ADX for a complete trading system.

Sample Calculation

Technical chart for ADX

Technical Indicators

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