ADX and MACD

ADX also identifies range conditions, so a trader won't get stuck trying to trend trade in sideways price action.

ADX also alerts the trader to changes in trend momentum, so risk management can be addressed.

“Average Directional Movement Index”, or “ADX”, indicator is a member of the “Trend” family of technical indicators. J. Welles Wilder created the ADX in 1978 in order to measure the strength of trend forces.

Traders use the index to determine if a trend will extend or gradually lose its strength, valuable information when setting entry and exit levels in the forex market.

The ADX can also be classified as an “oscillator” since the various curves produced fluctuate between values of zero and 100.

The “signal” line of the indicator rarely goes above 60, but values below 20 indicate a weak trend, and values over 40 suggest a strong one.

ADX, or Average Directional Index, is a tool that is designed to help us anticipate the strength of a trend to avoid some bad kind of situations.

The Average Directional Index (ADX) depicts a presence or absence of a trend. ADX advices on the strength of the dominant forces that move market prices here and now.

The ADX technical indicator is useful for gauging market conditions and for signaling peaks in trends where the market may then move sideways.

To summarize, ADX advices on trend tendencies: whether the trend is going to continue and strengthen or it is about to lose its positions.

The ADX indicator can be calculated using a set of formulas. The formulas are depicted in the figure attached.

The ADX's main purpose is to measure the strength of market trends on a 0-100 scale; the higher the ADX value the stronger the trend.

It should be noted that while the direction of price is important to the ADX's calculation, the ADX itself is not a directional indicator.

Traders typically use the ADX as a filter along with other indicators to create a more concrete trading methodology.

The ADX helps the trader to determine whether there is a moment in the forex market trend or not, and gives us information about what stage we are the trend has just started or is already in its final stage.