DMI technical indicator
I actually don't know much about the DMI indicator, thank you. @Meta MooLet me have the opportunity to learn and understand these technical indicators. Let's learn together next.
DMI indicator is a medium to long-term stock market technical analysis method.
Regarding the methods of using DMI indicator: A systematic basic usage explanation: when the market trends are clear, the indicator performs well. PDI (Positive Directional Indicator), MDI (Negative Directional Indicator), ADX (Average Directional Index).
1. When the PDI line crosses above the MDI line, indicating new long positions entering, it is a buy signal.
2. When the PDI line crosses below the MDI line, indicating new short positions entering, it is a sell signal.
3. When the ADX value remains higher than the previous day, the market trend will continue.
4. When the ADX value decreases to below 20, and moves sideways, the market sentiment is in consolidation.
5. When the ADX value transitions from an upward trend to a downward trend, it indicates an impending market reversal.
Parameters: N is the statistical days; M is the interval days, generally 14, 6.
Hmm, did you learn it?![]()
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Let's do some practical operations. Here I have chosen $Berkshire Hathaway-B (BRK.B.US)$
1. Note that in the chart, the PDI line in the green box breaks upward through the MDI line, indicating a new long position and a buy signal. At this time, you can see that the stock price is rising.
2. Conversely, you can see in the chart's red box that the PDI line falls below the MDI line, indicating a new short position and a sell signal. At this time, the stock price is falling.
3. When the ADX value remains higher than the previous day, the market trend will maintain its original direction. Observe that the ADX value in the green box of the chart is gradually rising, indicating that the upward trend is also being maintained.
4. Pay attention to the red box in the chart. When the ADX value transitions from a rising tendency to a falling tendency, it indicates a market reversal. At this time, the stock price is falling. When the ADX value decreases, falls below 20, and moves horizontally, the stock price is undergoing a consolidation trend.
DMI indicator is a medium to long-term stock market technical analysis method.
Regarding the methods of using DMI indicator: A systematic basic usage explanation: when the market trends are clear, the indicator performs well. PDI (Positive Directional Indicator), MDI (Negative Directional Indicator), ADX (Average Directional Index).
1. When the PDI line crosses above the MDI line, indicating new long positions entering, it is a buy signal.
2. When the PDI line crosses below the MDI line, indicating new short positions entering, it is a sell signal.
3. When the ADX value remains higher than the previous day, the market trend will continue.
4. When the ADX value decreases to below 20, and moves sideways, the market sentiment is in consolidation.
5. When the ADX value transitions from an upward trend to a downward trend, it indicates an impending market reversal.
Parameters: N is the statistical days; M is the interval days, generally 14, 6.
Hmm, did you learn it?
Let's do some practical operations. Here I have chosen $Berkshire Hathaway-B (BRK.B.US)$
1. Note that in the chart, the PDI line in the green box breaks upward through the MDI line, indicating a new long position and a buy signal. At this time, you can see that the stock price is rising.
2. Conversely, you can see in the chart's red box that the PDI line falls below the MDI line, indicating a new short position and a sell signal. At this time, the stock price is falling.
3. When the ADX value remains higher than the previous day, the market trend will maintain its original direction. Observe that the ADX value in the green box of the chart is gradually rising, indicating that the upward trend is also being maintained.
4. Pay attention to the red box in the chart. When the ADX value transitions from a rising tendency to a falling tendency, it indicates a market reversal. At this time, the stock price is falling. When the ADX value decreases, falls below 20, and moves horizontally, the stock price is undergoing a consolidation trend.
Advantages: DMI takes into account the daily high and low volatility to more accurately reflect the trend of quotes, better predict the future development and changes of quotes.
Disadvantages: The DMI crossover signal is slower in indicating market trends compared to other indicators, so this indicator is more suitable for medium to long-term investors and is not recommended for short-term investors. Sometimes, even though the ADX indicator has turned, the stock price continues to rise without reversing.
The above is purely my personal opinion, and I welcome everyone to discuss it together.![]()
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Disadvantages: The DMI crossover signal is slower in indicating market trends compared to other indicators, so this indicator is more suitable for medium to long-term investors and is not recommended for short-term investors. Sometimes, even though the ADX indicator has turned, the stock price continues to rise without reversing.
The above is purely my personal opinion, and I welcome everyone to discuss it together.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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