Most indicators tell you direction. ADX (Average Directional Index) tells you something more fundamental: strength. It measures how strong a trend is, regardless of direction, on a scale from 0 to 100 — which makes it the perfect companion to directional tools, because it tells you when to trust them.
Reading the number
- ADX below ~20 — weak or no trend; the market is ranging. Trend tools (MAs, crossovers) will whipsaw here.
- ADX above ~25 — a real trend is present; trend-following signals are more trustworthy.
- ADX rising — the trend is strengthening; ADX falling — it is weakening, even if price still drifts that way.
- Note: a high ADX says strong, not up — it is direction-blind.
Why it is so useful
The single biggest cause of losses with trend indicators is using them in a range. ADX is the filter for exactly that: only take moving-average crossovers or breakouts when ADX confirms a trend is actually present, and switch to range tactics (fading the edges) when ADX is low. It turns 'is this even a trend?' from a gut feeling into a number.
The DI lines
ADX is often shown with two companion lines, +DI and −DI, which do carry direction: +DI above −DI means buyers dominate, and vice versa. A common combined read is 'trade in the direction of the dominant DI line, but only when ADX is above 25.' Direction from the DIs, permission from ADX.