Average Directional Movement Index Rating (ADXR) Forex Strategy

The Average Directional Movement Index Rating (ADXR) forex strategy is a strategy whose core is built around the measuring the strength of a price action in either direction.

The strategy takes into cognizance the combination of the 100 pips momentum and average directional movement index rating (ADXR) custom indications in delivering buy and sell alert triggers.

Chart Setup

MetaTrader 4 Indicators: Average Directional Movement Index Rating.ex4 (ADXR) (default setting), 100Pips Momentum.ex4 (default setting)

Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours

Recommended Trading Sessions: Any

Currency Pairs: Majors and cross pairs

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Download Average Directional Movement Index Rating (ADXR) Forex Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy in the market if the following rules or conditions are met:

  1. If the blue line of the 100Pips Momentum indicator crosses the red line bottom up, it is an indication that prices is experiencing some upward pressures i.e. a buy signal.
  2. If the ADXR line crosses above the 25.0000 level as shown on Fig. 1.0, indications a strong trend, meanwhile when it crosses above the 40.0000 level, the trend is said to be very strong.

At the same time, if the +DI (dotted YellowGreen) line is above the -DI (dotted wheat) line, the trend is confirmed to be bullish and adding both signals indicates a strong bullish trend.

Stop Loss for Buy Entry: Place stop loss below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit on position(s) if the following conditions or rules hold sway:

  1. If the blue line of the 100Pips Momentum indicator crosses the red line downwards, it indicates a changing trend i.e. an exit or take profit is advised.
  2. Based on individual trading preference, if the ADXR line breaks below the 40.0000 mark, it indicates that the current trend is not so strong and if it further breaches the 25.0000 level, it goes to say that the strength of the current trend is winding down.

I’ll advice an exit below the 40.0000 level. On the instance when the +DI line crosses the –DI line, an exit or take profit can also be applied.

Sell Entry Rules

Initiate a sell in the market if the following conditions are true:

  1. If the blue line of the 100Pips Momentum indicator crosses the red line downwards, with the red line staying above the blue line, it is an indication that prices is heading bearish.
  2. If the ADXR line crosses above the 25.0000 level as shown on Fig. 1.0, indications a strong trend, meanwhile when it crosses above the 40.0000 level, the trend is said to be very strong.

If the +DI (dotted YellowGreen) line is below the -DI (dotted wheat) line, it affirms a bearish trend.

Stop Loss for Short Entry: Place stop loss above immediate resistance.

Exit Strategy/Take Profit for Short Entry:

Exit or take profit on position(s) if the following chart patterns are in display:

  1. Wait for the blue line of the 100Pips Momentum indicator cross the red line, if this pattern shows up, then exit or take profit accordingly.
  2. If the ADXR line breaks below the 40.0000 level or the –DI line crosses the +DI line.

Fig. 1.1

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About The Trading Indicators

Developed by Welles Wilder, the Average Directional Movement Index Rating (ADXR) gauges the strength of price movement in both direction and also defines the strength of the trend.

Usually it is smoothed version of the ADX and most suitable on longer timeframes.

The 100pips Momentum indicator offers bullish and bearish entry signals. This is due to the indicator’s make i.e. being made up of four technical studies with the ATR volatility indicator included.

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