Additional Directional Movement (ADX) Part 1

Hello Friends here we come up with another write up on “Commodity Corner Series”.

Topic is Additional Directional Movement (ADX) Part 1.


Additional Directional Movement (ADX)


We would touch upon aspects like what is ADX, what does it mean for Investors and what are the basics of ADX.


As futures markets are volatile in nature & remain in over bought/-sold condition for a period of time, there is a need to confirm a move with an additional confirmation signal.


It is important to predict the trend of the commodities futures & the analyzing the strength with applying technical tools.


Reading directional signals from price alone can be difficult, & it is here where this indicator “Additional Directional Movement” provides an early signal to guide investor in right way.


This indicator was created in 1978 by J. Welles Wilder, who also created the popular Relative Strength Index.




ADX differentiates between strong and weak trends, allowing trader to enter only the strongest trends.


The positive & increasing values on the Y-axis of the indicator measures how strongly price moves upward; the negative or decreasing figures measure how strongly price moves downward.


· When the +ADX is dominant and rising, price direction is up.

· When the -ADX is dominant and decreasing, price direction is down.


In other words, the -ADX rises when price falls, and falls when price rises.



Next Blog we would read about what are the features of ADX and the current scenario of the ADX in the market.


Stay Tuned for more on this.


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One response to this post.

  1. Good points, I think I will definitely subscribe! I’ll go and read some more! What do you see the future of this being?


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