ADX, like Stochastic or RSI, is another oscillating indicator. It fluctuates between 0 and 100, with readings below 20 indicating a weak trend and readings above 50 signaling a strong trend. ADX doesn't determine whether the current trend is bullish or bearish. It merely measures the strength of that trend. Therefore, ADX is often used to identify ranging markets or the beginning of a new trend.
In the example above, initially, ADX was below 20. When it crossed above 50, it signaled that a strong trend could be forming. You can see on the chart that BTC broke below the ranging area and started a downtrend.
In the example above, initially, ADX was below 20. When it crossed above 50, it signaled that a strong trend could be forming. You can see on the chart that BTC broke below the ranging area and started a downtrend.
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