What is the Directional Movement Index (DMI)?

What is the Directional Movement Index (DMI): A chart indicator used in the technical analysis of financial markets. Its primary purpose is to indicate the directional strength of price trends.

Category: Technical analysis indicator

How is the Directional Movement Index (DMI) Used: The DMI aids in assessing the direction and strength of price trends for a security or market. Crossovers between the two main lines (+DI and -DI) are typically used as trading signals to buy or sell. The greater the spread between these two lines, the stronger the trend may be in a given direction. The Average Directional Index (ADX) is a third line that can be added to the DMI to give an overall picture of trend strength.

What Does the Directional Movement Index (DMI) Consist of: The DMI compares prior highs and lows and draws two lines: a positive directional movement line (+DI) and a negative directional movement line (-DI). A third line (ADX) indicates the difference between the two other lines. When the +DI is above -DI, there is more upward pressure than downward pressure in price. If -DI is above +DI, then there is more downward pressure in price.

What Does the Directional Movement Index (DMI) Look Like:

Chart of the Directional Movement Index (DMI)
Chart of the Directional Movement Index (DMI) – Source: TheTechnicals.com and TradingView

<<< Back to ‘What is…?’

IMPORTANT: TheTechnicals.com makes the information on this website available as a service to be used for informational purposes only. While we have tried to provide accurate and timely information, and have relied on sources we believe to be reliable, the site may include inadvertent technical or factual inaccuracies or omissions. We do not warrant the accuracy or completeness of the materials provided.

Neither TheTechnicals.com nor any of its affiliates, directors, officers or employees, will be liable or have any responsibility for any loss or damage that you may incur in the event of any failure or interruptions of this site, or the data contained in it, or from any other cause relating to your access to, inability to access, or use of this site or these materials.