iCharts Discussions

[ConMan]

Hi

Just wanted to highlight the importance of ADX along with DMI levels. There are many a times DMI levels are pushed to extremes and we take a contra position basis that. I just want to highlight why is ADX also important along with extreme DMIs.

As you can see in the chart, whenever ADX is below 40 and the DMI is below 10, the impact of the DMI is very less and not very lasting. On the other hand just check when DMI moves to extreme along with ADX moving above 40. The impact is tremendous as this occurs in EoD.

Do share your feedback

Regards
QGM

[ridinghood]

hi qgm

pl let me know what is adx ? is it advance decline ratio?

nd i cant see adx on the chart posted by u! only dmi nd rsi apart from nifty price. pl help.

vry unique observation though!


regs
ridinghood

[ConMan]

Dear Ridinghood

ADX combines +DI with -DI, and then smooths the data with a moving average to provide a measurement of trend strength. Because it uses both +DI and -DI, ADX does not offer any indication of trend direction, just strength.

The blue line in DMI indicator is ADX

Regards

[jjm]

Dear Ridinghood & All

The ADX is an Oscillator, which measures the strength in the ongoing trend. ADX does not tell the trend as bullish or bearish, but is used to determine whether or not market is trending or trading regardless of its up or down. It indicates a strong trend over 40 and weak trend below 20. The+DI( POSITIVE DIRECTIONAL MOVEMENT) AND - DI(NEGATIVE DIRECTIONAL MOVEMENT) are the lines determining whether the trend is up or down.

1. in strong trend( ADX>40) one should use trend following indicators such as MA and MACD.
2. In weak trend(ADX<20) one should follow momentum indicators such as RSI and Stochastic.
3.When+DI cuts -DI from upside down, It's a bear trend and should prefer only short.
4. When-DI cuts + DI from upside down its a bull trend and should prefer only short.

would you like to have more information..send me a mail.. will provide material on same..

Am alway there in SB just buzz in with your email add..will send you stuff i have on this

Regards,

JJM

[ridinghood]

hi qgm nd jjm

thnx to both of u for ur kind responses!


regs ridinghood

[ridinghood]

hi qgm nd jjm

thnx to both of u for ur kind responses!


regs ridinghood

[amitkbaid1008]

Dear QGM I think you are not explained the chart very clearly. Please mark the example clear for clearing your point about ADX<10. Also the chart is very condensed so not easy to view it correctly.

[ConMan]

I know the chart is very condensed ... Its a 3 year chart & will be like this only. You can copy the same and paste it on MS paint then zoom to see the areas marked.

Thanks

[ridinghood]

thnx qgm. will do the same!

regs

ridinghood

[sherbaaz]

Hi QGM,

Nice thread. One of the very good indicator. It would be nice if you can continue this thread and also put more information about ADX.

Regards,

[sunrays]

triangle pattern in reliance.....
dmi+ dmi- seems to be consolidating in my terms for long .......the blue line also known as adx seems to be consistently trading blw 25 indicating the stock hasn't had a decent lasting momentum based move up/down for long.......can ril deliver this year either up or down

[psri]

hi jjm,

I think there is atypo error in the post.
in the explanationgiven by u on +D! and -D!, both the scenarios are given as short. One shd be Long... Is it not?

GS

[jjm]

Dear Psri,,



U r right buddy

Regards,

JJM

[ConMan]

Sure Sherbaaz

Ill try and post a few....request others to join me in this forum

Regards

[jjm]

Dear All,

While doing google...Got a name of book on ADX.

AdXcellence-power trend strategies by Dr. Charles Schaap.. though not read ... you may get relevant information...

Regards,

JJM