The average Directional Movement Index Rating (ADXR) is a smoother version of ADX. ADX indicator and is used as a rating of the Directional Movement while smoothing out ADX values.
If ADXR is compared to ADX, then smoother ADXR does not rely much on the short-term market turn and reversal. Which, in the long run, relies on ADXR, allowing trading risks to be reduced.
How to trade with ADXR
- When ADXR is above 25 – a trend-use the following system.
- When ADXR goes below 20 – Trend – Avoid using the following systems, instead use the pendulum-based system for a quiet, non-trending or range-bound market.
- A rising ADXR with DI + above D indicates a strong bull market.
- A growing ADXR with DI-above DI + indicates a strong recession market.
- A cross of ADXR and ADX lines can also be used to evaluate market changes.