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ADX indicator
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Joined: 14 Sep 2017
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ADX indicator

The second Doji candle confirmation is the indicator of the Average Directional Movement Index, or commonly referred to as the ADX indicator. This indicator was made by Welles Wilder to identify trend direction and measure the strength of the current trend. In principle, this indicator shows when the trend starts, how strong the trend is, until when the trend starts to weaken. If you use ADX in trading, the best time for an Entry is when the trend starts, then Exit when the trend is almost over.

The ADX indicator is composed of 3 components, namely the ADX line itself, + DI, and -DI. The ADX line is usually set with parameter 14, while + DI shows Uptrend, and -DI as a signal for the Downtrend signal. If you find two DI lines that intersect (+ DI intersects with -DI, ​​or vice versa), then it shows a change of trend will occur. In relation to understanding the consolidation signals from the Doji candle, then:
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If + DI cuts -DI from the bottom up and a Doji candle appears, it indicates an Uptrend will occur.
If –DI cuts + DI from the bottom up and the Doji candle appears, then it indicates a Downtrend will occur.
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Although in practice this indicator includes lagging or is slow in anticipating price movements, it is still reliable and quite effective if you are accustomed to using it. In the chart below, it can be seen that the crossing of the -DI and + DI lines coincides with the appearance of the Doji candle which indicates bullish reversal.
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ADX indicator
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