ADX (Average Directional Index) is a technical indicator that measures the strength of a trend, regardless of its direction. LenQuant uses ADX as a key component in determining market state and setup quality.
Understanding ADX Values
ADX values range from 0 to 100 and indicate trend strength:
- 0-20: Weak or absent trend (ranging/choppy market)
- 20-25: Potential trend emerging, watch for confirmation
- 25-50: Strong trend in progress, good for trend-following
- 50-75: Very strong trend, but may be overextended
- 75-100: Extremely strong trend, rare and often near exhaustion
How LenQuant Uses ADX
ADX influences several aspects of the analysis:
- Market State: High ADX suggests trending, low ADX suggests ranging
- Setup Grade: Stronger ADX in trending setups improves grades
- Strategy Selection: Different ADX levels suggest different approaches
- Entry Timing: Rising ADX confirms trend continuation
ADX vs Direction
Important: ADX only measures trend STRENGTH, not direction. To determine direction, we combine ADX with +DI and -DI indicators. A rising ADX with +DI above -DI indicates a strengthening uptrend, while rising ADX with -DI above +DI indicates a strengthening downtrend.
💡 Pro Tips
- •ADX below 20 often means the market is consolidating—avoid trend trades
- •Rising ADX from low levels is a good sign of an emerging trend
- •Very high ADX (above 50) may indicate the trend is mature
- •Falling ADX doesn't mean the trend reverses—just that it's weakening
