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What the ADX indicator is, how it is calculated, and how to use it to measure trend strength — a complete guide with DI+ DI- strategies.
Published by The Retail Trader · AUG 01, 2026 · Features
What the ADX indicator is, how it is calculated, and how to use it to measure trend strength — a complete guide with DI+ DI- strategies.
ADX stands for Average Directional Index. It is a unique indicator that measures not the direction of a trend, but the strength of a trend. Other indicators (MACD, Moving Average) tell you direction — ADX tells you "how strong the trend is."
ADX is made up of three lines:
• ADX Line — Trend strength (0-100 scale)
• +DI (Positive Directional Indicator) — Upward pressure
• -DI (Negative Directional Indicator) — Downward pressure
Understanding the ADX Scale:
• 0-20 — Weak/No trend (range-bound market)
• 20-25 — Trend developing
• 25-40 — Strong trend
• 40-60 — Very strong trend
• 60+ — Extremely strong trend (rare)
Important: ADX does not tell you whether the trend is up or down — it only tells you whether there is a trend, and how strong it is. For direction you have to look at +DI and -DI.
DI and -DI Crossover:
• +DI crosses above -DI → A bullish trend is starting
• -DI crosses above +DI → A bearish trend is starting
ADX Line Movement:
• ADX is rising → The trend is strengthening (whether up or down)
• ADX is falling → The trend is weakening, consolidation may come
BUY Setup:
• +DI crosses above -DI
• ADX is above 20 (or heading above)
• Entry: On crossover confirmation
• Stop Loss: Recent swing low
• Target: Trailing stop with the trend
SELL Setup:
• -DI crosses above +DI
• ADX is above 20
• Same rules, reverse direction
The best use of ADX is this — deciding which indicator to use:
Keep these three points in mind:
• ADX < 20 — Market Type: Range-bound, Best Indicators: RSI, Stochastic, Bollinger Bands
• ADX 20-25 — Market Type: Transitioning, Best Indicators: Wait for confirmation
• ADX > 25 — Market Type: Trending, Best Indicators: MACD, Moving Average, Trend-following
This is the most important use of ADX — trending indicators (such as MACD) work only in a trending market. ADX tells you which market condition it is.
When ADX reaches an extreme high (such as 50-60) and starts coming down, it is a signal that the trend is exhausting.
Setup:
• ADX went up to 40+
• Has now started coming down
• Meaning: The trend's momentum is weakening, reversal or consolidation may come
Caution: This is not a timing signal, only a warning. Price action confirmation is needed for an actual reversal.
Default setting: 14-period
Keep these three points in mind:
• Intraday — Period: 9-14, Timeframe: 5-15 min
• Swing Trading — Period: 14 (default), Timeframe: Daily
• Positional — Period: 14-20, Timeframe: Weekly
Keep these four points in mind:
• Tells direction? — ADX: Indirectly (via DI lines), Moving Average: Yes, MACD: Yes
• Tells strength? — ADX: ✅ Yes (primary purpose), Moving Average: No, MACD: Partially
• Useful in a range-bound market? — ADX: ✅ Yes (as a filter), Moving Average: No, MACD: No
• Beginner-friendly — ADX: Medium-Hard, Moving Average: Easy, MACD: Medium
ADX tells only strength, not direction. For direction it is essential to look at +DI/-DI.
ADX < 20 means a range-bound market. In this condition, MACD or moving average crossover strategies will give false signals.
The +DI/-DI crossover gives false signals many times if ADX is weak. Always confirm with ADX above 20-25.
ADX is a lagging indicator — it confirms after the trend has already started. For entry timing use price action or other indicators.
Keep these points in mind:
• 📌 ADX QUICK REFERENCE
• Trend Strength:
• 0-20: No trend / Range-bound
• 20-25: Developing trend
• 25-40: Strong trend
• 40+: Very strong trend
• BUY Signal:
• ✅ +DI crosses above -DI
• ✅ ADX above 20-25 (confirming strength)
• SELL Signal:
• ❌ -DI crosses above +DI
• ❌ ADX above 20-25 (confirming strength)
• USE ADX AS FILTER:
• 🔥 ADX < 20 → Use RSI/Stochastic (range strategies)
• 🔥 ADX > 25 → Use MACD/MA crossover (trend strategies)
• AVOID:
• ⚠️ Trading DI crossover with ADX below 20
• ⚠️ Treating ADX as a direction indicator alone
• ⚠️ Using ADX for precise entry timing
Keep these five points in mind:
• Go to /charting
• Select a stock
• Search for "ADX" in Indicators
• ADX, +DI and -DI will all be plotted below the chart
• You can add a reference line at the 20-25 level
Pro tip: First check whether ADX shows a trend or a range — then select the right indicator accordingly.
Keep these four points in mind:
• MACD Indicator: Complete Trading Strategy
• Moving Average Strategy: 50 DMA vs 200 DMA
• How to Identify Support and Resistance?
• SuperTrend Indicator: Complete Strategy
This article is educational analysis — not investment advice. Do your own research, manage your own risk.
The Retail Trader — educational market analysis. Not investment advice.
This article is for education only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics change from time to time with the exchange, SEBI and RBI, so verify every number yourself with your broker or an official source.