Smart Start TA Series 42: Deeper Analysis with the DMI – Directional Movement Index

In Smart Start TA Series 33: ADX – Measuring the Strength of a Trend, we explored the ADX as a tool to gauge the strength of a market trend. The Directional Movement Index (DMI) builds on this by not only showing the strength of the trend but also revealing its direction. The DMI consists of three components: the +DI (Positive Directional Indicator), -DI (Negative Directional Indicator), and the ADX. Together, these components help traders determine whether bulls or bears are in control of the market.