What is adx use in technical analysis ?

The ADX quantifies trend strength by measuring directional movement over a given time frame. It provides traders with specific numbers (from 0 to 100) that represent strong or weak price trends. Traders can simply refer to the numbers to quickly assess the strength of a trend.

Traders could utilise the ADX to help them determine entry or exit points for a trade. The ADX could be used to identify potential overbought or oversold levels in the market.

Key takeaways. Average directional index (ADX) is a short-term chart indicator. It can be used to help you evaluate the market or an investment's strength. ADX currently suggests the short-term momentum behind stocks may be strong, with a caveat.