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Directional Movement Index

Directional Movement Index  (DMI) is applied to find out if there is Forex trend on market and what is its strength. Author of the Directional Movement Index  is J. Welles Wilder young.

Also indicator generates signals for opening of positions with the help of two lines: DMI plus (DMI+), a positively directed indicator, and DMI minus (DMI-) - a negatively directed indicator. A signal for purchase is crossing of DMI+ by DMI- from bottom to top, whereas signal for sale is crossing of DMI- by DMI+ from top to bottom. The line which is finally above will perform as dominating and shows direction of market. The bigger split between lines is, the stronger trend is.

Under low market volatility, Directional Movement Index  can produce false signals, therefore, it is necessary to use other indicators of technical analysis. But under a strongly pronounced trend, the indicator is at its best and works clearly.

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