Technical
What is ADX (Average Directional Index)?
A 0–100 gauge of trend strength — deliberately blind to direction. It answers whether a market is trending at all, versus drifting sideways.
Formula
ADX = 14-period smoothed average of |+DI − −DI| ÷ (+DI + −DI) × 100
How to Interpret
ADX rising through 25 says a real directional move (up OR down) is underway; below 20 says chop. Use it as a regime filter: trend-following signals work when ADX is high and rising; mean-reversion signals work better when ADX is low. Falling ADX during a rally warns the trend is losing energy.
Typical Ranges
Above 25 = trending market, below 20 = ranging. The most misread indicator in the standard set — a high ADX in a decline means a STRONG DOWNTREND, not bullish strength. Heavily smoothed, so it confirms trends late and lingers after they end.
Find Stocks Using This Signal
Screen US and Indian stocks by ADX in the Technical Screener.