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Futures Charts
- Technical Analysis Help
Directional Movement Index
Indicator
The DMI indicator deals with the trending quality of a
market. This indicator has three lines: DMI+ (DMIPlus),
DMI- (DMIMinus), and ADX. If the DMI- is above the DMI+,
this indicates a downward trending market while a DMI+
above the
DMI- indicates an upward trending market.
Signals are generated when DMI+ crosses DMI-; DMI+
crossing above DMI- generates a bullish signal while DMI+
crossing below DMI- generates a bearish signal.
Additionally, for a signal to be considered valid, the ADX
line must be
rising at the time of the crossover. If ADX isn't rising
when DMI+ crosses DMI- some traders will consider the
signal valid if ADX begins rising within a few bars.
Preliminary exit signals can be interpreted if ADX begins
declining or if DMI+ and DMI- cross again in the opposite
direction.
Additional References:
Kaufman, Perry J. The Commodity Trading Systems & Methods.
John Wiley & Sons, Inc. New York. 1978.
Wilder Jr., Welles. New Concepts in Technical Trading
Systems. Trend Research. McLeansville, NC. 1978.
Technical Analysis Studies Available to you
are:
You can adjust parameters of each indicator
to suit you.
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