Indicators

ADX: The Indicator That Measures Trend Strength

Astron Team · 09/24/2026 · 4 min read

A common mistake is applying a trend strategy to a market that's moving sideways, generating entry after entry with no clear direction. The ADX (Average Directional Index) was created precisely to prevent this kind of mistake: it doesn't indicate whether the price will rise or fall, but rather how strong the current trend is, helping decide whether it's worth using a trend strategy at that moment or not.

This article explains how the ADX is built, how to interpret the most commonly used levels, and how to combine it with the DI+ and DI- directional lines to also get a sense of direction.

Where the ADX comes from

The ADX is born from comparing two auxiliary indicators, DI+ (positive directional movement) and DI- (negative directional movement), which measure the strength of upward and downward moves separately. The ADX itself is a smoothed average of the difference between these two lines, shown as a single value that ranges from 0 to 100, though it rarely goes above 60 in practice.

How to interpret ADX levels

• Below 20: weak or absent trend, market probably ranging sideways — trend strategies tend to generate false signals in this range.
• Between 20 and 25: a possible trend beginning, still without consolidated strength.
• Above 25: trend considered strong, a more favorable environment for trend-following strategies.
• Above 40: very strong trend, though at this point the move may also be closer to exhaustion than to its beginning.

Using the ADX together with DI+ and DI-

On its own, the ADX doesn't tell you the direction of the move — only its strength. To know the direction, you need to watch the DI+ and DI- lines: when DI+ is above DI-, the bias is bullish; when DI- is above DI+, the bias is bearish. A crossover between these two lines, combined with an ADX rising above 20 or 25, is read by many traders as confirmation that a new trend is gaining strength.

A practical reading example

Imagine an asset with the ADX rising from 15 to 28 over two weeks, while DI+ crosses above DI-. This combination suggests an uptrend is forming with growing strength, unlike a situation where the price rises but the ADX stays stuck below 20 — in that second case, the rally is more likely to be just a short-winded move within a bigger sideways range. Comparing the two scenarios side by side helps explain why two charts with similar prices can call for completely different decisions.

The most common traps

• Treating the ADX as a direct buy or sell indicator, when in fact it only measures intensity, not direction.
• Ignoring that the ADX is a lagging indicator: it confirms a trend's strength after it has already started, not before.
• Assuming that a very high ADX means the trend will continue for a long time — in practice, very high peaks sometimes precede a consolidation or reversal of the move.
• Using only one calculation period (the default is usually 14) without testing whether it fits well with the asset and the timeframe being observed.
• Trading exclusively off the DI+ and DI- crossover, without considering the ADX's absolute level at the moment of the crossover, which can generate entries in markets that still lack real strength.

How to include the ADX in your analysis routine

A practical way to use the ADX is as an upfront filter: before applying any strategy based on moving averages, MACD, or breakouts, check whether the ADX is above 20 or 25. If it's below that, consider reducing position sizes or even avoiding trend strategies until the indicator shows greater strength.

Like any indicator built on past prices, the ADX doesn't guarantee that the current strength will hold, and trading during a strong trend still carries a real risk of a sharp reversal. Practicing the combined reading of ADX, DI+, and DI- in a demo account, whether on Astron or another charting platform, helps build confidence in interpreting these levels before applying them with real capital.