The Average Directional Movement Index, or ADX, is a technical indicator which helps to determine price trends. J. Welles Wilder was the developer who described in detail this concept in the book “New concepts in technical trading systems”. It involves the comparison of two directional indicators 14-period +DI and 14-period –DI to determine the trading method at the simplest level on the basis of Directional Movement system. To calculate it, chart indicators are drawn on each other, or +DI is subtracted from –DI. It is worth buying if +DI gets higher than –DI, and selling when +DI gets lower than –DI.

A technical indicator that gauges the momentum or strength of a prevailing trend regardless of its direction.