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2016issue C1322-23

Score RSI and stochastic crossings only when ADX confirms the trend

This archive article teaches a combination filter on a crowded chart. The relative strength index and the stochastic oscillator supply threshold crossings, while a rising average directional index confirms that those crossings sit inside a strong trend. The reader then compares that checklist with a bar-level expert overlay.

  • A relative strength index crossing up through its oversold threshold is treated as a buy-side alert.
  • A stochastic oscillator crossing down through its overbought threshold is treated as a sell-side alert.
  • A rising average directional index confirms a strong trend and does not issue a standalone entry.
  • Form an independent reading of the crowded chart, then compare it with the expert overlay on the selected bar.
Entries in this reading3 entries
Current trackAverage Directional Index71 readingsStochastic oscillator170 readingsRelative Strength Index186 readings

Score the chart as one filter

A combination filter uses the relative strength index, the stochastic oscillator, and the average directional index together so threshold crossings are interpreted only in the context of confirmed trend strength.

The illustrated exercise asks the reader to form an independent reading of a crowded multi-indicator chart before comparing it with the expert commentary on the selected bar.

Assign each indicator a job

The relative strength index is a lookback oscillator built from ordered prices. In the documented rule set, a crossing up through its oversold threshold is treated as a buy-side alert.

The stochastic oscillator is a lookback oscillator built from ordered prices. In the same rule set, a crossing down through its overbought threshold is treated as a sell-side alert.

The average directional index is a lookback trend-strength reading. When it is rising, it confirms that a trend is strong and is not used to issue a standalone entry.

Compare your reading with the expert overlay

The expert overlay is a rules engine that inspects the joint price, volume, and indicator configuration on a selected bar and returns a written analysis of that bar. It is built to read the joint configuration of price, volume, and every technical indicator shown on the chart rather than a single series.

The overlay is described as a knowledge base of condensed technical-analysis rules that matches the current price, volume, and indicator state to a canned analysis. The expert commentary applies to the bar under the cursor and can be saved as a file for later review.

AAPL last-bar expert readings, 24 Sep 2015

SuperCharts printed the 24 September 2015 AAPL quote and the last-bar DMI, MACD and slow-stochastic values that the expert overlay later scored. A trader should treat those four last-bar readings as the filter inputs: directional movement is still bearish (DI+ below DI-), MACD is in bullish territory without a cross, and SlowK sits under SlowD at 59.61 — then compare that checklist with the written expert commentary.
SuperCharts printed the 24 September 2015 AAPL quote and the last-bar DMI, MACD and slow-stochastic values that the expert overlay later scored. A trader should treat those four last-bar readings as the filter inputs: directional movement is still bearish (DI+ below DI-), MACD is in bullish territory without a cross, and SlowK sits under SlowD at 59.61 — then compare that checklist with the written expert commentary.AAPL · Daily · 2015-07-01T00:00:00.000Z to 2015-09-24T00:00:00.000Z

Values are taken from the SuperCharts quote line and pane labels on Figure 1 (and restated in the expert overlay), not traced off the candlestick raster. The price pane is too dense to digitize bar-by-bar without inventing precision the screenshot cannot carry.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
51 of 56 in the Average Directional Index track
20187-7 pp.Next on Average Directional IndexConstructing an ADX filter for intraday breakoutsAn intraday breakout entry can use average directional index strength as the filter for whether a new-high move is treated as a candidate trade.
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 year201678 readings
All 71 readings tagged Average Directional Index
Also on Average Directional Index5 readings
2004The average directional index as a regime gate for the relative strength index and the stochastic oscillator1991Constructing five-session forecasts from stochastic, ADX, and MACD inputs1994Building average directional index, the stochastic pair, and Williams percent R from highs, lows, and closes1994Label the tape before you read stochastic or Williams %R2000Stochastic pop as a filtered continuation setup