EP ADX Indicator

The ADX indicator is made up of three intersecting lines. One of them indicates whether or not there is a trend. The crossing of a horizontal is taken to determine when we are in a period with a trend and when it is better not to trade, depending on whether the ADX value is above or below this horizontal.

The modifications introduced in the ADX make its interpretation easier. In addition to coloring the areas, an oscillator has been introduced that indicates the distance between the + DI and -DI lines. The position of this oscillator and its crossings on the zero line or above the average line will give us clearer signals of entry or exit from the market.

Also, the colors displayed on the oscillator will show the areas where the buying trend is decreasing (the color changes from green to red). The same for the case that the selling trend, in red, is compressing, the color of the oscillator will change to green, indicating this circumstance. These color changes will never be taken directly as buying signals.

Purchase patterns in ADX EP.
The color displayed by the ADX will indicate if we should look for purchases or sales. The narrowing of the color zones will indicate that a change in the price movement is likely to occur. In the oscillator, this narrowing is reflected in minimum values, close to line 0.

The time to enter the market would be when the oscillator crosses the horizontal upwards, turning green and separating the lines that form it. This will indicate that the buying force is intensifying.

As we see in the image, we can also take into account the raising of the oscillator on its average.

Sales patterns in ADX EP.
To enter the sale, we will use the opposite situation: the oscillator crosses the horizontal (or its average) downward, becoming red, while at the bottom we see an increase in trend (gray area) and selling force (red area)

Lateral market.
When there is no defined trend, the indicator will show values in the ADX below 0 (the gray area is shown below zero or very close to 0). The oscillator is also shown flat, close to zero. We clearly see this situation in the following image. After slowing down a slight fall in the price, it enters a zone of indecision, alternating slight increases with small decreases.

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