What Is the Positive Directional Indicator (+DI)?

The Positive Directional Indicator (+DI) is a component of the Average Directional Index (ADX) and is used to measure the presence of an uptrend. When the 🦹+DI is sloping upward, it𒈔 is a signal that the uptrend is getting stronger.

This indicator is nearly always plotted along with the 澳洲幸运5官方开奖结果体彩网:Negative Directional Indicator (-DI).

Formula for the Positive Directional Indicator (+DI)

 $\begin{aligned} &\text{+DI} = \left ( \frac{ \text{S +DM} }{ \text{ATR } } \right ) \times 100 \\ &\textbf{where:}\\ &\text{S +DM} = \text{Smoothed +DM} \\ &\text{+DM (Directional Movement)} = \text{Current High} - \text{PH} \\ &\text{PH} = \text{Previous High} \\ &\text{S +DM} = \textstyle{ \left ( \sum_{t=1}^{14} \text{+DM} \right ) - \left ( \frac{ \sum_{t=1}^{14} \text{+DM} }{ 14 } \right ) + ( \text{C +DM} ) } \\ &\text{C +DM} = \text{Current +DM} \\ &\text{ATR} = \text{Average True Range} \\ \end{aligned}$​+DI=(ATR S +DM​)×100where:S +DM=Smoothed +DM+DM (Directional Movement)=Current High−PHPH=Previous HighS +DM=(∑t=114​+DM)−(14∑t=114​+DM​)+(C +DM)C +DM=Current +DMATR=Average True Range​

How to Calculate the Positive Directional Indicator (+DI)

1. Calculate +DI by finding +DM and True Range (TR).
2. +DM = Current High - Previous High.
3. Any period is counted as a +DM if the Current High - Previous High > Previous Low - Current Low. Use -DM when Previous Low - Current Low > Current High - Previous High.
4. TR is the greater of the Current High - Current Low, Current High - Previous Close, or Current Low - Previous Close.
5. Smooth the 14-periods of +DM and TR using the formula below. Substitute TR for +DM to calculate ATR. [The calculation below shows a smoothed TR formula, which is slightly different than the official ATR formula. Either formula can be used, but use one consistently].
6. First 14-period +DM = Sum of first 14 +DM readings.
7. Next 14-period +DM value = First 14 +DM value - (Prior 14 DM/14) + Current +DM
8. Next, divide the smoothed +DM value by the ATR value to get +DI. Multiply by 100.

What Does the Positive Directional Indicator (+DI) Tell You?

Traders will typically follow the position of +DI versus -DI. When +DI is greater than -DI there is said to be a 澳洲幸运5官方开奖结果体彩网:bullish trend. Thus, w🐟hen +DI crosses ab🌳ove -DI it signals the potential for a new price uptrend.

When -DI is above +DI the price is in a 澳洲幸运5官方开奖结果体彩网:bearish trend. When -DI crosses 𓆏above +DI it could signal the start of a downtrend in price.

The +DI and -DI, combined, are called the 澳洲幸运5官方开奖结果体彩网:Directional Movement Index (DMI). T♒💦his system can be enhanced by the addition of the Average Directional Index (ADX).

ADX shows the 🉐strength of a trend. Wilder reported that a strong trend can be evident when🐠 the Average Directional Index is greater than 20, and especially 25.

In this way, all the lines can be used together. When the ADX is above 20, and the +DI is above (or crossing) -DI then long trades should be favored. When ADX is above 20 and the -DI is above (or crossing) +DI then short trades should be favored.

The Differences Between the Positive Directional Indicator (+DI) and a Moving Average

While the +DI tracks positive price movements, there are several differences between it and a 澳洲幸运5官方开奖结果体彩网:moving average. A moving average is the average price of an asset ཧover a set time period. The +DI is only factoring in the current high minus the prior high, when applicable. Due to the calculation differences, a moving average will provide different information to a trader tha🎀n the +DI.

Limitations of Using the Positive Directional Indicator (+DI)

Used on its own, the +DI indicator doesn't reveal much. In order to provide value, it is combined with the Negative Directional Indicator (-DI). This way, traders can gauge which direction has more force and also spot 澳洲幸运5官方开奖结果体彩网:crossovers that may signal new trends.

A third line, called the ADX, is also often added. This line shows trend strength by taking a smoothed average of the difference between +DI and -DI.

Even with these additional lines, the indicator can still produce faulty signals. Crossovers may occur but no trend in price develops. Also, the indicator is looking at 澳洲幸运5官方开奖结果体彩网:historical prices and therefore isn't necessaril♒y predictive of where prices will go ⭕next.