ADX

Is there a trend at all?

ADX answers the question every other indicator assumes: is this market trending, or is it chopping sideways? It measures the strength of a trend without saying which way it goes. Below 20 No trend. Trend-following tools will lose money here. Oscillators may work. 20 to 25 A trend may be forming. Above 25 A real trend is in place. Trend tools have something to work with. Above 50 A very strong trend, often late in it. Rising ADX The trend is strengthening, whichever direction it runs. ADX is the tool that tells you which of your other tools to trust. Running a moving average crossover in a market with ADX at 12 is running a trend system in a market with no trend, and it will be chopped apart.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Charts.