The ADX (Average Directional Index) Indicator is a technical analysis tool used to measure the strength of a trend in an asset’s price movements. It is calculated by taking the difference between two directional indicators, Positive Directional Indicator (+DI) and Negative Directional Indicator (-DI), and smoothing the result over a period of time.
The ADX value ranges from 0 to 100, with a higher value indicating a stronger trend. The ADX Indicator is a lagging indicator, as it uses historical price data to calculate its values. However, it can still provide valuable insights into potential trend strength and momentum when used in conjunction with other technical analysis tools. The ADX Indicator is commonly used by traders to identify potential trend changes and to determine whether a trend is strong enough to justify a trade.