ADX (Average Directional Index)
Web3 / technical analysis
The Average Directional Index is a technical indicator that quantifies trend strength on a scale of 0 to 100, independent of whether the trend is upward or downward. It combines two directional movement indicators—the positive directional indicator (+DI) and negative directional indicator (-DI)—to produce a single value. ADX readings below 20 suggest weak or no trend, values between 20-40 indicate a developing trend, 40-60 represent a strong trend, and above 60 signal an extremely strong trend. This makes ADX invaluable for distinguishing ranging markets from trending ones in crypto trading. Example: During Ethereum's 2021 bull run, ADX values consistently remained above 40 on weekly charts, confirming the powerful uptrend and helping traders stay committed to long positions rather than being shaken out by minor pullbacks. Why it matters for crypto technical analysis: ADX prevents traders from wasting time on choppy, low-trend markets where stop-losses trigger frequently. By confirming genuine trend strength, traders can allocate capital more efficiently and avoid whipsaw losses in sideways crypto markets.
Explore the full Web3 Glossary — 2,038+ expert-curated definitions. Need guidance? Talk to our consultants.