ADX (Wilder's DMI -
Directional Movement Index)
The Directional Movement is a trading system developed by Welles Wilder to help determine if a stock is trending. The system involves the 14-day +DI (directional indicator) and the 14-day -DI. Wilder suggested buying when +DI rises above -DI and selling when +DI falls below -DI.
But this overly simplified suggestion offered many false signals, so Wilder went a step further. He then suggested noting the high of the day when the +DI crosses over the -DI and only buying when prices eclipse this high. Likewise he suggested noting the low of the day when the +DI crossed below the -DI and to only sell when the stock made a new low.