The Directional Movement Index is three indicators in one, all from J. Welles Wilder. The +DI line measures upward directional movement. The -DI line measures downward directional movement. The ADX (Average Directional Index) measures overall trend strength regardless of direction.

When +DI is above -DI, buyers are in control and the trend is up. When -DI is above +DI, sellers dominate. Crossovers between the two lines are buy and sell signals — not precise entry tools on their own, but a reliable read on which side currently has the edge.

The ADX is the most useful component. Below 20, the market is trendless: choppy, directionless, not worth trading with trend-following strategies. Above 25, a real trend is in place. Above 40 is a strong trend. The direction of ADX matters as much as the level — a rising ADX at 18 is more meaningful than a falling ADX at 30. Rising ADX means the trend is strengthening. Falling ADX means it's weakening, even if price hasn't reversed yet. Most trend-following setups benefit from requiring ADX above 25 before acting on other signals.