Directional Movement (DM)¶
| Name | Type | Prerequisite | Use Cases |
|---|---|---|---|
| Directional Movement (DM) | Momentum | OHLC Data | Building block for trend-strength indicators. |
Definition¶
Directional Movement (DM) consists of two components: +DM (Positive Directional Movement) and -DM (Negative Directional Movement). It is the foundational calculation for the ADX indicator.
Mathematical Equation¶
-
+DM: Current High - Previous High (if > 0 and > |Low - Prev Low|)
-
-DM: Previous Low - Current Low (if > 0 and > |High - Prev High|)
Special cases¶
- Maximum possible value: 100
- Minimum possible value: 0
- Behavior: Oscillates between 0 and 100 for both +DI and -DI lines to determine trend direction.
Trading Significance¶
- Direction: If +DM is above -DM, the trend is up.