ADX – Average Directional Index (FX Replay User Guide)
The ADX helps you gauge trend strength, so you know when to lean into momentum trades — and when to avoid choppy, sideways markets.
What It Does
Developed by J. Welles Wilder Jr., the ADX consists of three key components:
- ADX Line: Measures overall trend strength
- +DI Line: Bullish pressure
- –DI Line: Bearish pressure
All values are plotted between 0 and 100 (typically over a 14-period range).
How to Use It on FX Replay
Trend Strength
ADX > 25 → Trending market
ADX < 25 → Ranging or weak trend
The higher the ADX, the stronger the trend (regardless of direction).
Trend Direction
+DI above –DI → Bullish bias
–DI above +DI → Bearish bias
Momentum Shifts
If ADX is rising and +DI is above –DI → strong bullish trend
If ADX is rising and –DI is above +DI → strong bearish trend
If ADX is falling → trend may be losing steam
Trading with ADX on FX Replay
- Confirm Setups: Use ADX to validate breakouts or trend-continuation plays. If ADX is climbing past 25, momentum is building.
- Avoid Chop: If ADX is flat and under 20–25, stay out or pivot to range strategies.
- Trend Reversal Clues: Watch for +DI/–DI crossovers with ADX beginning to rise — could signal a new trend forming.
- Pair It Up: Combine ADX with structure (support/resistance) or a moving average for more precise entries and exits.
