ADX fluctuates between 0 and 100. Readings below 20 indicate a weak trend or ranging market and readings above 40 indicate a strong trend. ADX does not indicate direction but rather just the strength of the trend, up or down.

Often plotted with ADX are two lines that indicate direction. The lines are +DI and -DI. If the +DI line is above the -DI line, then the trend is considered bullish. Crosses of the +DI and -DI lines generate buy and sell signals. For example, if +DI crosses above -DI, then a buy signal is generated.

Related Words

* Technical analysis
* Trend
* Trend analysis
* Day trader