Average Directional Movement
Average Directional Movement refers to the two directional indicator lines — +DI (positive) and −DI (negative) — that accompany the ADX. While ADX measures the strength of a trend, +DI and −DI tell you which side is winning. Together they form Wilder’s Directional Movement System, a complete framework for trading trends in Indian markets.
Key takeaways:
- +DI measures upward directional pressure; −DI measures downward pressure.
- Crossovers between +DI and −DI are classic trend-change signals.
- Best used with ADX > 25 to ensure the trend is strong enough to trade.
- Default period is 14; intraday traders may shorten to 9–10.
- Useful for both swing entries and trend-following continuation trades.
The Wilder directional system
J. Welles Wilder’s 1978 book introduced three companion indicators: +DI, −DI and ADX. They are typically plotted together. +DI tracks how often the day’s high exceeds the prior day’s high; −DI tracks how often the day’s low falls below the prior day’s low. ADX is derived from the spread between the two.
Reading +DI and −DI
- +DI above −DI = bullish bias; the higher the spread, the stronger the trend.
- −DI above +DI = bearish bias.
- The classic “DI crossover” is a buy when +DI crosses above −DI (with rising ADX), sell when reversed.
Worked example
Bank Nifty has been consolidating with both lines hugging the 20 level. Suddenly +DI rises sharply above 30 while −DI falls below 15, and ADX moves up through 25. The setup signals a fresh bullish phase. Long positions taken around this signal often ride the bulk of the resulting trend.
Filtering false signals
| Filter | Rule |
|---|---|
| ADX threshold | Trade only when ADX > 25 |
| Confirmation candle | Wait for daily close after crossover |
| Trend filter | Verify against a 50- or 200-day SMA |
Using +DI/−DI with other indicators
- RSI mid-line + DI confirms momentum direction.
- Moving average crossover + DI gives stronger trend signals.
- Volume confirmation reduces whipsaws during quiet markets.
Limitations
Directional Movement is lagging — by the time the cross signals trade entry, part of the move has occurred. It also performs poorly in choppy markets where +DI and −DI cross repeatedly. Always read the signal in context with ADX strength.
Frequently asked questions
Is Average Directional Movement the same as ADX?
No. ADX measures trend strength; +DI/−DI measure direction. They are part of the same system.
Default period 14 — should I change it?
Stick with 14 for daily charts; shorten for intraday or lengthen for weekly.
Can I trade only +DI/−DI crosses?
You can, but combining with ADX dramatically improves win rate.
Does Lemonn display these indicators?
Yes — +DI, −DI and ADX appear together as the “DMI” or “ADX system” indicator.
