The indicator balances volumes using the closing price reported at the extreme points of the trading day.
It must confirm the stock trend in progress by moving in the same direction as the stock trend. A divergence between prices and Accumulation/Distribution is often a signal that the current trend may reverse. (more…)
Technical indicator Average Directionnal Index, usually known as ADX.
We first calculate +DM and -DM (the directional movement) , the number of points obtained in a direction. We apply a wilder moving average on +DM and -DM to calculate +DI and -DI. Then we calculate DX.
Dx = 100 x ((+DI) – (-DI)) / ((+DI) + (-DI)).
Finally to obtain ADX we apply again a wilder moving average on DX.
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