Posts Tagged ‘Additional Directional Movement’

Additional Directional Movement (ADX) Final Part

Hello Friends here we come up with an extension of our previous blog “Additional Directional Movement (ADX)” Part 1.

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Additional Directional Movement (ADX) Final Part

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In this blog we would read about the features of ADX and the current scenario of the ADX in the market.

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ADX On PRACTICE

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The great feature of ADX is the ability to see buying and selling pressure at the same time.

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Values above 40 indicate very strong trending while values below 20 indicate non-trending or ranging market conditions.

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The indicator does not grade the trend as bullish or bearish, but merely assesses the strength of the current trend.

When ADX begins to strengthen from below 20 and moves above 20, it is a sign that the trading range is ending and a trend is developing.

The current scenario of ADX falling from the levels of 32 & now continuing at 25, tells that the momentum of price is toward a weaker section with a sideways movement.

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It shows that the sellers are stronger than the buyers,this is seen in a downtrend.

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The lesser volumes of trade & the bearish fundamentals also confirm that the overall sentiments are not supportive to the prices.

The factors are as follows:

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· Fresh arrivals are coming to the spot market with harvesting in Idukki.

· Commencement of fresh arrivals with higher moisture content is likely to keep check on the price.

· Indian production is also expected to be higher by 10% to 55,000 tonnes.

· Indian parity in the international market quoting at $3,200-3,225 a tonne (c&f).

· Spot prices have plunged by 9% within a span of 4 weeks, quoting near the levels of 14K.

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The investors are being cautious to enter the trade, which is hence keeping the price in a range between Rs. 13800-14800.

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However, the current tight stock levels in pipeline, & demand from the overseas and domestic market is adding support to prices.

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The DMI lines are good reference for price volatility.

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In a nutshell, values of the ADX can be used to confirm the strength of an upward/down trend & also give the investor the confidence to enter into the trade.

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🙂

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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.

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Additional Directional Movement (ADX)

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

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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.

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

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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.

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

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THE BASICS

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

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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.

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

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

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

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🙂

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

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Stay Tuned for more on this.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here