adx?dmi

Directional Movement Index

• Trade only those markets withanADXR above 25/30.
  • Trending market: ADXR > 25/30 or rising 3 points in 1 week.
  • Non-trending: ADXR < 25/30 and momentum is negative.
• Signals
  • Buy = up index (+DI) crosses above the down index (-DI)
  • Sell = down index (-DI) crosses above the up index (+DI)
• Stop out positions using the Extreme Point Rule
  • On the day that +DI and -DI cross, use the extreme point made that day, as the Reversal Point.
  • If you just went long, the reversal stop point is the low made on the day of the crossing.
  • If you just went short, the reversal stop point is the high made on the day of the crossing.
  • Continue to hold this position and the stop, until you are stopped out, even if the lines have crossed.
• Trend change
  • In strong uptrending moves, the +DI and the ADXR turn up early and move higher, with the +DI generally holding above the ADXR.
  • A high probability signal that the uptrend has stalled or ended is generated when the ADXR line crosses above the +DI, and then turns down. This signal commonly occurs on the day of the trend change or slightly before.
  • It rarely takes more than a few days past a true trend shift to see the ADXR turn down. A warning that a top may be near is often signalled when the +DI stalls and turns down from a high level.