The Average Directional Index (ADX) is a powerful technical analysis tool designed to measure the strength of a trend, regardless of its direction. Whether a market is climbing or falling, the ADX can help traders determine if the trend is strong enough to trade—making it an essential part of any Forex trader’s toolbox.
The ADX is a type of momentum oscillator that moves between 0 and 100:
Unlike some indicators, ADX does not show the direction of the trend—it only reflects how strong it is. That’s why it’s often used alongside directional indicators or price action patterns.
Here’s a quick breakdown of ADX levels and what they mean:
ADX Value | Meaning |
---|---|
Below 20 | Weak or ranging market |
20–40 | Strong trend emerging |
Above 40 | Very strong trend |
Rising ADX | Momentum is increasing |
Falling ADX | Momentum is slowing |
Scenario 1: Strong Downtrend
Scenario 2: Powerful Uptrend
These examples show how ADX can confirm breakouts and validate trend strength.
Here are three strategic ways to apply ADX:
“The trend is your friend… until it ends. Let ADX help you know when that time might be.”
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