Directional Movement Index FLEX

5 thg 8, 2023

A common problem experienced by short term traders using DMI/ADX is that the session breaks results in carry-over effects from the prior session. For example, a large gap up would result in a positive DMI, even though momentum is clearly negative. Note the extremely different results in the morning session, when the gap is reversed.

The DMI-FLEX algoritm resets the +DI and -DI values to the prior session ending midpoint, so that new momentum can be observed from the indicator. (Note for Pinescript coders: rma function does not accept series int, thus the explicit pine_rma function)

DMI-FLEX has the added feature that the ADX value, instead of a separate line, is shown as shading between the +DI and -DI lines, and the color itself is determined by whether +DI is above -DI for a bullish color, or -DI is above +DI for a bearish color.

DMI Flex also gives you the flexibility of inverse colors, in case your chart has inverted scale.

Summary and How to use:
1) Green when +DI is above -DI
2) Red when -DI is above +DI
3) Deeper shading represents a higher ADX value.