Average Directional Index info

Average Directional Index (ADX) is a technical indicator created by J. Welles Wilder that measures trend strength (not direction!). Values range from 0 to 100.

This indicator is a supplementary tool for assessing whether trend strategies are worthwhile, monitoring changes in trend strength and avoiding weak, choppy movements

Value Interpretation:
0-25: Weak trend or sideways market
25-50: Moderate to strong trend
50-75: Very strong trend
75-100: Extremely strong trend (rare)

Important: ADX does not indicate trend direction (up/down), only its strength!

This script indicator includes additional features:
1. ADX Plot (purple line)
Basic ADX value showing current trend strength.

2. ADX Trend Analysis (arrows)
The script compares current ADX with its 10-period moving average with ±5% tolerance:
↑ (green): ADX rising → trend strengthening
↓ (red): ADX falling → trend weakening
⮆ (gray): ADX stable → trend strength unchanged

3. Information Table
Displays current ADX value with trend arrow in the top-right corner.

Parameters to Configure
Smoothing (default: 14) - Indicator smoothing period
Lower values (e.g., 7): more sensitive, more signals
Higher values (e.g., 21): more stable, less noise

Indicator Length (default: 14) - Period for calculating directional movement (+DI/-DI)
Wilder's standard value is 14

Trend Length (default: 10) - Period for moving average to analyze ADX dynamics
Determines how quickly changes in trend strength are detected

Practical Application
✅ Strategy 1: Trend Strength Filter
1. ADX > 25 → look for positions aligned with the trend
2. ADX < 25 → avoid trend strategies, consider oscillators
✅ Strategy 2: Entries on Strengthening Trend
1. ADX crosses above 25 + arrow ↑ → trend gaining momentum
2. Combine with other indicators (e.g., EMA) for direction confirmation
✅ Strategy 3: Exhaustion Warning
1. ADX > 50 + arrow ↓ → strong trend may be exhausting
2. Consider profit protection or trailing stop