ADX EMAs Distance
- Indicatori
- Versione: 1.0
The Average Directional Index (ADX) is a technical analysis indicator developed by J. Welles Wilder in 1978. Its primary function is to measure the strength of a trend, regardless of its direction, and to determine whether the price has entered a sideways trend. It is also mentioned by John Murphy in *The Visual Investor* (2005) as an indicator that helps determine whether a market is ranging or is about to start a new trend.
As for Exponential Moving Averages (EMAs), some authors believe that they were first introduced into the study of time series as a data-smoothing technique for statistical models.
The “ADX EMAs Distance” indicator is a custom indicator based on the idea that popular assets with sufficient liquidity cannot remain static for very long; therefore, the more static prices become over a given period, the more certain it is that they will experience a sharp movement afterward.
The distances between 4 EMAs with different time frames have been normalized, resulting in three curves that represent the distance between 2, 3, and 4 EMAs. When the curves touch the horizontal line at level 0, the distance between them is zero, which is the case with a simultaneous multiple crossover. Since the crossover is usually delayed, a special level line has been added to warn of the proximity of the moving averages before they cross.
In fact, since EMAs alone are insufficient to determine the direction of the subsequent sharp price movement, the two complementary ADX lines: +DI and -DI have been added for visual reference; these are the ones that actually indicate the direction in which to enter the trade before the movement begins.
