The Average Directional Movement Index Rating (ADXR) indicator is an attempt to quantify the momentum change of the ADX indicator. It was developed by J. Welles Wilder and described in his book “New Concepts In Technical Trading Systems”, written in 1978. The ADXR is constructed adding the current ADX value and an ADX value n-Periods ago and then dividing that sum by two. This additional smoothing step causes the ADXR to be slightly less responsive to changes in the trend than the ADX. According to Wilder, this smoothing step was used to help compensate for the variance of excessive tops and bottoms.
ADXR. A technical analysis tool that averages the day’s average directional index (ADX) with the ADX from two weeks prior. It is designed to show how strong the ADX trend is.
The Average Directional Movement Index Rating – ADXR – uses the ADX bar value and calculates the average sum of it and the ADX value of a recent, trailing bar. As a result the ADX values smooth. As with the ADX, a rising ADXR can indicate a strong basic trend. A falling ADXR in its turn can suggest a weakening trend subject to a reversal. Often ADXR can also indicate non-trending markets or the worsening of an current trend. Still the ADXR is not a directional indicator even though Forex market direction is significant in its calculation,.
ADXR measures the strength of a prevailing trend and defines if there is direction in a market. As a rule a reading above 25 is thought to be directional (it’s plotted from zero and over). ADX defines the market tendencies and indicates if it changes quickly enough to reach it. ADX helps to get profit staying in the center of significant trends.
The directional analysis usually follows movements in people’s mood – both optimistic and pessimistic, measuring the possibility of the bulls and bears to move the prices under the boundaries of a price range of the preceding day. If the today’s lowest price is lower than the yesterday’s smallest one, the market is likely to go to pessimism. And vice versa, if the today’s best price is higher than yesterday’s one, the market can get more optimistic.