Introduction to the ADX Crossing Indicator
The ADX Indicator is a trend following indicator used by traders to identify trending markets with strong momentum. The classic version plots three lines – the ADX line, -DMI line, and +DMI line. These three lines are used in tandem to identify trend direction and possible trend reversals.
The ADX Crossing Indicator is a trend reversal signal indicator based on the classic ADX Indicator.
What is the ADX Crossing Indicator?
The ADX Crossing Indicator is a trend following signal indicator which based on the Average Directional Movement Index (ADX) Indicator.
This indicator plots dots to indicate potential trend or momentum reversals. It plots lime dots below price action to indicate a possible bullish reversal. Inversely, it also plots red dots above price action to indicate a possible bearish reversal.
These dots can be used as a reversal signal indication in confluence with other technical analysis indications which include market trends and price action.
How the ADX Crossing Indicator Works?
The ADX Crossing Indicator uses an underlying ADX indicator within its algorithm. It is the main that the ADX Crossing Indicator uses to verify trend reversals.
The ADX Indicator has two components which are used to determine trend direction. These are the Directional Moving Indicator (DMI) lines, which are the -DMI and the +DMI lines. A bullish trend reversal is indicated whenever the +DMI value crosses above the -DMI value. On the other hand, a bearish trend reversal is indicated whenever the +DMI value crosses below the -DMI value.
However, the ADX Crossing Indicator does not consider all crossovers as a trend reversal signal. It filters crossovers based on whether the ADX value indicates a strong trending market or not. If so, the indicator would plot lime dots on bullish reversals or red dots on bearish reversals.
How to use the ADX Crossing Indicator for MT4
The ADX Crossing Indicator has several input options within its indicator settings.
The “ADX bars” variable allows users to modify the number of bars the indicator would use for its formula.
“Count Bars” refers to the historical number of bars in which the indicator would plot reversal signals.
“Use Sound” triggers the signal alert sound on or off.
“Sound File” allows users to modify the alert sound used whenever a reversal signal is triggered.
Buy Trade Setup
When to Enter?
Open a buy order if a lime bar appears below a candle in confluence with other bullish technical indications.
When to Exit?
Close the trade as soon as price action shows signs of a possible bearish reversal.
Sell Trade Setup
When to Enter?
Open a sell order if a red bar appears above a candle in confluence with other bearish technical indications.
When to Exit?
Close the trade as soon as price action shows signs of a possible bullish reversal.
Conclusion
The ADX Crossing Indicator signals are not always accurate. As such, it is best to use this indicator in confluence with other technical indications for improved trade accuracy.
Although the signals this indicator produce are not always accurate, it has the tendency to identify reversal signals that can run for a longer trend and produce huge gains.
Traders can incorporate this indicator to a bigger picture trading strategy as an additional confirmation of a probable trend reversal.
Recommended MT4/MT5 Broker
XM Broker
- Free $50 To Start Trading Instantly! (Withdraw-able Profit)
- Deposit Bonus up to $5,000
- Unlimited Loyalty Program
- Award Winning Forex Broker
- Additional Exclusive Bonuses Throughout The Year
- Exclusive 50% Cash Rebates for all Trades!
Already an XM client but missing out on cashback? Open New Real Account and Enter this Partner Code: 𝟕𝐖𝟑𝐉𝐐
(Free MT4 Indicators Download)
Enter Your Email Address below, download link will be sent to you.