TA Challenge: How do you identify trends with moving averages?

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Milk The Cow joined discussion · Mar 17, 2022 14:45

Tech Analysis To Identify Trend Using Directional Movement Index - DMI 📈 Day 4 (AMC As Example)

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Milk The Cow :Tech Analysis To Identify Trend Using Moving Average - MA 📈 Day 1 (AMC As Example)

Milk The Cow :Tech Analysis To Identify Trend Using MACD 📈 Day 2 (AMC As Example)

Milk The Cow :Tech Analysis To Identify Trend Using Exponential Moving Average - EMA 📈 Day 3 (AMC A...

Directional Movement Index (DMI)?
Is a technical indicator that measures both the strength and direction of a price movement and is intended to reduce false signals.
(Sound cool 😎)

Consist 3 lines:
1. Positive directional movement line (+DI)
[Highs]
2. Negative directional movement line (-DI)
[Lows]
3. An optional third line, called the average directional index (ADX)

Formulas:
+DI = [(Smoothed +DM) / ATR] ×100
-DI = [(Smoothed -DM) / ATR] ×100
DX=(∣+DI − -DI∣/∣+DI + -DI∣) ×100
where:+DM (Directional Movement)=Current High−PH
PH=Previous high
-DM=Previous Low−Current Low
Smoothed +/-DM=∑(14, t=1)DM−[∑(14, t=1)/DM14]+CDM
CDM=Current DM
ATR=Average True Range

*As usual, all calculations have been done by the moomoo 🐮 app indicator

Source:
Investopedia - DMI

Do not explore too deep into it.
If not, u may become insane.
U just need know how to use DMI indicator that's all .

So to use DMI, visit @Meta Moo post to understand more:
Meta Moo :Technical Analysis Challenge Day 4 - DMI

To tell the truth, I'm new to DMI too.
So let's learn together .
What I learned from @Meta Moo :
Moomoo DMI Indicator comprises four lines: PDI, MDI, ADX and ADXR.
ADX = overview of the trend's strength
PDI and MDI = price action's direction

Moomoo use different symbol:
DX = 100 * ((PDI - MDI) / (PDI + MDI))
where
ADI = modified Moving Average of DX
PDI = Current Plus Directional Movement
DX = Current DX
MDI = Current Minus Directional Movement

(u get the idea 💡... it's the same method)
Source:
https://download.esignal.com/products/workstation/help/charts/studies/adi.htm

Key 🔑 points:
ADX above 25 + PDI above MDI
=ADX measure strength of uptrend
If PDI below MDI
=ADX measures strength of downtrend
(Hmm... I guess "25" is the lucky number.
What about if it's below 25? Well, whatever)

OK, let's move on to the practical...
Using $AMC Entertainment (AMC.US)$ as the example.

P1:
(First, some of u guys may have DMI missing.
Go to "Indicators" setting = Mentioned in previous post Day1 & add indicator.)

Tech Analysis To Identify Trend Using Directional Movement Index - DMI 📈 Day 4 (AMC As Example)

P2:
(Select DMI as shown in below picture 📸)

P3:
(Remove ADXR since what we leaned from @Meta Moo that is not required for the moment.)

P4:
Origin AMC Graph:
(U should be at here by now if u have followed the steps correctly. Oi, don't go wrong direction)

P4.1:
Applying what we learned to use DMI indicator:

Green circling = ADX > 25
PDI = ORANGE
MDI = PINK
Blue circling = PDI > MDI
Conclusion for P4.1 at that period = Possible uptrend

P4.2:

Yellow circling = ADX < 25
(I think >25 or < 25 is just measuring the strength... so is something like to know if it's a market trap. Above 25 mean u should be safe since the trend strength is strong, I guess. PDI & MDI are the main focus.)
PDI = ORANGE
MDI = PINK
Blue circling = PDI < MDI
Conclusion for P4.2 at that period = Possible downtrend

Yup, I guess that how we should apply DMI.

Mentioned before in previous post Day 3, not all indicators are suitable for long term investors.
It just depends on how u use them.

This marked the 4th day & the last day of the event. (Finally done)
Well, guess will cya guys around in the moomoo community sometime.

As always, DYODD first before investing

Edited:
Related Topic:
Milk The Cow :How To Use Bollinger Bands, 1st Part TA Challenge?🤨

Milk The Cow :How to use KDJ for short-term trading, TA Challenge🤔?

Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more

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Milk The Cow OP : Now thinking back, I may had read before DMI in the very past...
It just that I'd forgotten all about it since I never use it, hahaha.
Pieces of memories are coming back to me.
My backup folders in my brain activated again .

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Milk The Cow OP Milk The Cow OP : Nice sharing of ideas.
It also helps refreshed my memoriesby learning together or teaching (well, maybe teaching is not my type/style).

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Meta Moo : You've completed all the 4 tasks

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Meta Moo Milk The Cow OP : learning by teaching

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Milk The Cow OP Meta Moo :

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steady Pom pipi : You're great

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Milk The Cow OP steady Pom pipi : Ty

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Milk The Cow

DYODD before investing 👌

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