ADX Bitcoin Trading Analysis and ADX Bitcoin Trading Signals

Developed by J. Welles Wilder

This a momentum indicator used to determine the strength of a bitcoin price trend; it is derived from the DMI - Directional Movement Index which has two lines.

+DI - Positive Directional Movement Index

–DI - Negative Directional Movement Index

ADX is calculated by subtracting these two values and applying a smoothing function.

The ADX is not a directional indicator but a measure of the strength of the bitcoin trend which has a scale of Zero to 100.

The higher the indicator value the stronger the trend.

A value of below 20 indicates that the btcusd trading market is not trending but moving in a range.

A value of above 20 confirms a buy or sell cryptocurrency signal and indicates a new bitcoin trend is emerging.

Values above 30 signifies a strong trending market.

When ADX turns down from above 30, it signifies that the current bitcoin trend is losing momentum.

ADX combined with DMI

Since the ADX alone is a directionless indicator it is combined with the DMI index to determine the direction of bitcoin crypto.

DMI

ADX and DMI Index

When the ADX is combined with DMI index a bitcoin trader can determine the direction of the bitcoin trend and then use the this indicator to determine the momentum of the prevailing bitcoin trend direction.

Bitcoin Trading Analysis and Generating Bitcoin Trading Signals

Buy Bitcoin Trading Signal

A buy cryptocurrency signal is generated when the +DI is above –DI, and the ADX is above 20

The Exit signal is generated when the indicator turns down from above 30.

Buy Crypto Trading Signal

Sell Bitcoin Trading Signal

A short signal is generated when the –DI is above +DI, and the ADX is above 20

The Exit signal is generated when the indicator turns down from above 30.

Sell Crypto Trading Signal