Average Directional Index (ADX)

Average Directional Index (ADX) is a technical indicator developed by Welles Wilder. ADX is an indicator used as a value for the strength of trend. ADX is non‐directional so it will quantify a trend’s strength regardless of whether it is up or down.

The formula, which can be found in Wilder’s 1978 book New Concepts in Technical Trading Systems, is quite lengthy but essentially compares the average amount of upward price movement (measured from high to high) and the downward price movement (measured from low to low) over a given time period.