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Excerpt from:  Forex Training
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September 03, 2008

How Strong is That Currency Market Trend?

Average Directional Index (ADX)
One way to try and determine the strength of a currency market trend is to use the Average Directional Index (ADX)

Average Directional Index (ADX)

The ADX is one of the simpler indicators to understand. It most often takes into account the price in the last for 14 trading days, and it is used to show average values:
  • Below 20, weakness is seen.
  • Above 40, strength is seen.
  • Above 60, very rare strength in seen.
This is just an evaluative indicator, however, and should not be used as a signal generator when it comes to buying and selling. Rather, it is a tool that can be used to help you assess the strength of a currency market trend.
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Topic Tags:  ADX, average direction index, currency market, currency market trend, forex trading, trading days, values
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