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The Negative Directional Indicator (- DI) is an important trend indicator that traders use to spot price trend and indicate the direction of a security or a market in a given period. It is used to measure the downward momentum of a market or a security and to confirm the strength of the current trend.
The Negative Directional Indicator (-DI) is part of a more comprehensive indicator called the Average Directional Index (ADX). The ADX is comprised of three lines; the Positive Directional Indicator (+DI), the Negative Directional Indicator (-DI) and the Average Directional Index (ADX). The Average Direction Index (ADX) is a lagging indicator with no directional bias - it merely provides an indication of trend strength. The +DI and -DI line, however, indicate the trend direction of the market.
The +DI line reflects upward momentum and the -DI line reflects downward momentum; when combined they can gauge the strength of a trend. When the -DI is moving up, above the +DI, then the price downtrend is getting stronger, and when -DI is moving down, and below the +DI, then the price uptrend is strengthening. If a trend changes direction, this is also signaled by a crossover between +DI and -DI, with a crossover in the opposite direction providing confirmation of the trend change. For example, if -DI crosses above the +DI then a new downtrend could be starting.
The -DI is used to help evaluate momentum, confirm trend and the likelihood of the trend’s continuation. This is especially helpful to traders looking to capture intraday, short term and long term trends. When used in combination with the +DI and ADX, -DI can provide a reliable indication of the current direction of a price trend and its momentum. Combined, the +DI and -DI provide an indication of the direction and strength of a trend and when combined with the ADX provide an indication of the likelihood of the trend continuing.
Overall, the Negative Directional Indicator (-DI) is a simple but very useful tool to assess the strength and direction of a security’s or market’s current trend. It is useful to traders looking to focus on intraday, short term and long term trends. By properly combining it with the +DI and the ADX, traders can accurately predict the direction and strength of a trend and gauge the trend’s likelihood of continuing.
The Negative Directional Indicator (-DI) is part of a more comprehensive indicator called the Average Directional Index (ADX). The ADX is comprised of three lines; the Positive Directional Indicator (+DI), the Negative Directional Indicator (-DI) and the Average Directional Index (ADX). The Average Direction Index (ADX) is a lagging indicator with no directional bias - it merely provides an indication of trend strength. The +DI and -DI line, however, indicate the trend direction of the market.
The +DI line reflects upward momentum and the -DI line reflects downward momentum; when combined they can gauge the strength of a trend. When the -DI is moving up, above the +DI, then the price downtrend is getting stronger, and when -DI is moving down, and below the +DI, then the price uptrend is strengthening. If a trend changes direction, this is also signaled by a crossover between +DI and -DI, with a crossover in the opposite direction providing confirmation of the trend change. For example, if -DI crosses above the +DI then a new downtrend could be starting.
The -DI is used to help evaluate momentum, confirm trend and the likelihood of the trend’s continuation. This is especially helpful to traders looking to capture intraday, short term and long term trends. When used in combination with the +DI and ADX, -DI can provide a reliable indication of the current direction of a price trend and its momentum. Combined, the +DI and -DI provide an indication of the direction and strength of a trend and when combined with the ADX provide an indication of the likelihood of the trend continuing.
Overall, the Negative Directional Indicator (-DI) is a simple but very useful tool to assess the strength and direction of a security’s or market’s current trend. It is useful to traders looking to focus on intraday, short term and long term trends. By properly combining it with the +DI and the ADX, traders can accurately predict the direction and strength of a trend and gauge the trend’s likelihood of continuing.