Adx indicator

The Average Directional Index (ADX) is a technical indicator that is used to measure the strength of a trend. It is a popular indicator among traders and is often used in conjunction with other technical indicators to confirm trend strength and identify potential trade opportunities.

The ADX is calculated using a formula that considers the difference between two exponential moving averages (EMAs) of price, as well as the difference between the two EMAs of the absolute difference between the two EMAs. The resulting value is plotted as a line on a separate window below the price chart.

Traders typically look for ADX values above 25 to indicate a strong trend, with values above 50 indicating a very strong trend. When the ADX is below 25, it may indicate a range-bound market or a weak trend.

The ADX can be used in a variety of ways, including to confirm the strength of a trend, to identify potential trend reversals, and to set stop-loss orders. It is important to note, however, that the ADX is a lagging indicator, meaning that it is based on past price data and may not always accurately predict future price movements.