New Up/Down trend (ADX)

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New Up/Down trend (ADX)

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The Average Directional Index (ADX) does not indicate trend direction or momentum, only trend strength. ADX is often used to identify whether the market is ranging or starting a new trend.

ADX will range between 0 and 100. Generally, ADX readings below 20 indicate trend weakness, and readings above 40 indicate trend strength. An extremely strong trend is indicated by readings above 50.

ADX can be used to confirm coin’s current trend. You could also combine ADX with a trend indicator (SMA, EMA) that identifies whether the coin pair is trending up or down. ADX can also be used to determine if you should close a trade early – when ADX starts to slide below 50, it indicates that the current trend is weakening.