Directional Movement

Directional Movement




The (DMI) meaning Directional Movement Indicator  is three separate indicators combined into one. It’s regarding as being one of the trend indicators.

 

Directional Movement Indicator

Directional Movement Indicator is made up of the Average Directional Index (ADX), minus Directional Indicator (-DI) and the plus Directional Indicator (+DI)

By combining all three, a technical analyst has a way of determining and measuring a trend’s strength as well as its direction.

To assess a trend strength, the analysis will be on the ADX line more than the +DI or -DI lines.

A Directional Movement Indicator reading above 25 can indicate a strong trend, whilst a reading below 20 can indicate a weak trend.  Note a reading between the two values, will be considered indeterminable.

Directional Movement Indicator

With the Directional Movement Indicator if the -DI is above +DI, then a Bearish Market is in play and if the +DI is above the -DI, then a Bullish Market is in play .

Directional Movement Indicator

The Directional Movement Indicator Crossovers are a significant trading signal produced by the indicator.

For a Bearish Crossover

  • ADX must be over 25
  • The -DI crosses above the +DI.
  • The signal strengthens if ADX rises.

For a Bullish Crossover

  • ADX must be over 25
  • The +DI crosses above the -DI.
  • The signal strengthens if ADX rises.

The Directional Movement Indicator (DMI) is valuable technical analysis indicator. It takes the trend strength and the direction and calculates it into a simple and straightforward visual for a trader.

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