The Average Directional Index (ADX) is a technical indicator developed by J. Welles Wilder that measures the strength of a trend, but not its direction.

It moves between 0 and 100. A higher value means the trend is strong, while a lower value means the market is weak or moving sideways.

ADX is used along with two other indicators:
• +DI (Positive Directional Indicator) shows upward movement
• –DI (Negative Directional Indicator) shows downward movement

The ADX itself is calculated from the difference between +DI and –DI, and helps traders understand how strong a trend is, regardless of whether it is going up or down.

Key interpretation:
• ADX below 20: Weak or no trend (sideways market)
• ADX 20–40: Developing or moderate trend
• ADX above 40: Strong trend
• Rising ADX: Trend is getting stronger
• Falling ADX: Trend is losing strength

In October 2023, Reliance Industries was trading between ₹2,400 and ₹2,500 for several weeks, showing little movement. During this time, the ADX stayed below 20, indicating a weak or non-trending market.

In early November, the stock broke above ₹2,520, and the ADX started rising above 25. At the same time, the +DI line moved above the –DI line, suggesting buyers were gaining control.

Over the next few sessions, the stock moved toward ₹2,650 while the ADX climbed toward 35, confirming that the uptrend was strengthening. Later, when the price slowed and ADX began falling toward 20, it signaled weakening momentum rather than an immediate reversal.

• 1978 – Introduction by J. Welles Wilder
The ADX was introduced by J. Welles Wilder in his book .

• Evolution in Trading
Originally designed for commodity markets, ADX was later widely adopted across equities, forex, and other marketsdue to its ability to measure trend strength.

• Present Use
Today, ADX is a standard indicator on most charting platforms and is commonly used in trend-following and momentum-based trading strategies.