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2008issue C071-3

Average directional index and directional trend indicator lookbacks as trend-filter parameters

The average directional index occupies a 0-to-100 scale and reports whether a trend is present and how strong it is, not the direction of that trend. The documented default stack is a 14-period exponential average of the directional index, a 9-period smoothing step, and a 20-period directional trend indicator interval.

  • The average directional index occupies a 0-to-100 scale and reports whether a trend is present and how strong it is, not the direction of that trend.
  • A directional trend indicator cross is treated as incomplete unless the average directional index is rising, sitting above both directional lines, and not moving sideways.
  • The documented default lookback stack is a 14-period exponential average of the directional index, a 9-period smoothing step, and a 20-period directional trend indicator interval.
  • Cutting those lookbacks toward zero speeds both measures and raises the frequency of false breaks; raising the same periods delays early detection and makes the accepted trend-filter reading stronger once it appears.
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Directional Trend Indicator3 readingsCurrent trackAverage Directional Index71 readingsTrend filter137 readings

What the average directional index reports

The average directional index occupies a 0-to-100 scale and is specified to report whether a trend is present and how strong it is, not the direction of that trend.

Readings above 25 are treated as a forming trend, while readings below 25 are treated as a range-bound or congested market that still needs a later trendline break as extra confirmation.

Used as a trend filter, the average directional index accepts a move after smoothed directional strength confirms and rejects a sideways reading as a false break.

Occupancy and the exhaustion band

A historical occupancy rule states that trends are present about 30 percent of the time and that markets are range-bound about 70 percent of the time.

Ordinary trends that appear in the low 20s are described as exhausting in the high 40s to 50s. That upper zone is the exhaustion band of the 0-to-100 scale. The 80-to-100 band is described as a rare extreme that news, month-end positioning, or shock events can still produce.

The documented lookback stack

The documented default stack is a 14-period exponential average of the directional index, a 9-period smoothing step, and a 20-period directional trend indicator interval. Those three periods form the lookback stack that sets response speed against false breaks.

Cutting those lookbacks toward zero speeds both the average directional index and the directional trend indicator and is also described as raising the frequency of false breaks.

Raising the same periods is described as delaying early detection while making the accepted trend-filter reading stronger once it appears.

When a directional trend indicator cross is complete

A directional trend indicator cross is treated as incomplete unless the average directional index is rising, sitting above both directional lines, and not moving sideways, because a flat average directional index is classified as a false break rather than a trend.

Congestion associated with weak average directional index readings is described as lasting as long as 12 to 14 days, with new trends expected to emerge from the teens to the low 20s.

A lagging hourly confirmation

In the hourly chart example, the average directional index did not confirm the advance until after the formal directional trend indicator cross and only about halfway through the move, which is used to illustrate the pair as a lagging trend-filter.

Hourly GBP/USD average directional index, 19 September–4 October 2007

On this hourly sterling window the 14/9 average directional index stays in the teens through the first half of the advance, only later crossing Wilder’s 25 trend-present line and reaching the high-40s exhaustion band as the spike reverses. Readings were taken from the printed Figure 1 pane; the software’s last ADX print on that figure is 15.2.
On this hourly sterling window the 14/9 average directional index stays in the teens through the first half of the advance, only later crossing Wilder’s 25 trend-present line and reaching the high-40s exhaustion band as the spike reverses. Readings were taken from the printed Figure 1 pane; the software’s last ADX print on that figure is 15.2.GBP/USD · 1 hour · 2007-09-19T00:00:00.000Z to 2007-10-04T00:00:00.000Z

Pane scaled 0–50 from the figure’s top tick of 50; the last print 15.2458 sits where the curve ends. Intermediate points are visual reads to the nearest point at the figure’s dated ticks, not tick data. Plus/minus DI (interval 20) appear on the same figure but overlap too tightly to place the 26 September cross without guessing, so they are omitted.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
34 of 56 in the Average Directional Index track
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All readings on this track · 56 readings
  1. 1986Cycle-aligned directional trend indicator
  2. 1987What crossover and directional entry rules actually compare
  3. 1988A directional-line cross needs a trend filter, an extreme-point rule, and a dollar stop
  4. 1988Constructing true range by offset addressing
  5. 1988Constructing directional movement from bar range
  6. 1988Average directional index construction: recursive smoothing and lookback offset
  7. 1988Staged Average Directional Index construction with Relative Strength Index confirmation and stop alerts
  8. 1988Average Directional Index construction with frozen true range and directional rules
  9. 1991Constructing the average directional index from range expansion and true range
  10. 1991Constructing five-session forecasts from stochastic, ADX, and MACD inputs
  11. 1993Constructing the average directional index from directional movement and true range
  12. 1993Confirming n-bar breakouts with ADX and DX filters
  13. 1994Constructing a Bollinger band-width trend filter
  14. 1994A pre-trade checklist that can refuse a long three ways
  15. 1997An ADX threshold and a moving average as a trend filter
  16. 1998Regime filters for mutated indicators
  17. 1999Building the average directional index from range extension and true range
  18. 2000Evaluating ADX, RSI, and moving averages in a multi-stock warehouse
  19. 2000Stochastic pop as a filtered continuation setup
  20. 2000Onset and exit from one average directional index
  21. 2002Joint ADX and MACD readout for trend strength and direction
  22. 2003Adaptive Donchian breakout with implied volatility and volume
  23. 2004The average directional index as a regime gate for the relative strength index and the stochastic oscillator
  24. 2004Constructing true-range-specified volume as a directional filter
  25. 2005Constructing a multi-filter penny stock breakout procedure
  26. 2005Construct one playbook that flips with session regime
  27. 2005Combining Bollinger Bands, the average directional index, and Fibonacci retracement on currency pairs
  28. 2006Assembling an adaptive price zone from double-smoothed averages
  29. 2006An ADX strength gate for MACD and the stochastic oscillator
  30. 2007Directional movement as a filter plus trigger
  31. 2007Constructing a veto-first trend permission stack
  32. 2007ADX gates for trend end, range, and reversal
  33. 2008Constructing a nine-cell directional-ratio grid
  34. 2008Average directional index and directional trend indicator lookbacks as trend-filter parameters
  35. 2008A holding-matched market lens from averages and directional-line crosses
  36. 2008A nine-cell directional scoreboard for multi-horizon entries
  37. 2010Building a Vortex Indicator from high-low distances
  38. 2010Constructing ADX, RSI, and MACD price filters
  39. 2011Constructing a volume zone oscillator with a moving-average and Average Directional Index regime filter
  40. 2011A volume zone oscillator conditioned by an Average Directional Index filter
  41. 2011Candlestick names need volume-price, ADX, and moving-average checks
  42. 2012Clustered average-directional-index traces as a trend-start filter
  43. 2012Average Directional Index cluster filters for trend-start signals
  44. 2012Confirming a trend start or turn with a triple ADX cluster
  45. 2013Constructing a late-entry stack from a signed DMI oscillator
  46. 2013A directional oscillator and its stochastic as a stacked timing filter
  47. 2013ADX cluster lookbacks are a locked specification, not a chart label
  48. 2013Combining moving averages, stochastics, and ADX in a daily scan
  49. 2015Assembling the Average Directional Index from directional movement
  50. 2016How an Average Directional Index filter and a breakout entry form one procedure
  51. 2016Score RSI and stochastic crossings only when ADX confirms the trend
  52. 2018Constructing an ADX filter for intraday breakouts
  53. 2018An ADX volatility gate for prior-day breakouts
  54. 2019Exponential deviation bands with a moving average, RSI and ADX
  55. 2020A normalized-slope trend filter from linear regression
  56. 2020Gating volatility-momentum divergences with a Trend filter
By fieldIndicators and filters682 readingsBy year200867 readings
All 71 readings tagged Average Directional Index
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2012Clustered average-directional-index traces as a trend-start filterDirectional Trend Indicator1986Cycle-aligned directional trend indicatorDirectional Trend Indicator1993Confirming n-bar breakouts with ADX and DX filters1994Constructing a Bollinger band-width trend filter1997An ADX threshold and a moving average as a trend filter