Learn ADX for Better Technical Analysis: How Pros Use This Indicator for 'Permission to Trade'

If you’ve ever felt like you were “too late” jumping into a trend — or got shaken out right before the real move — then mastering the Average Directional Index (ADX) could change the way you trade.

In a recent live webinar, Barchart’s John Rowland, CMT, broke down how professional traders use ADX to confirm trend entries and avoid false moves. The key lesson?

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Trends don’t move in a straight line. They move in impulses and corrections.

That’s where ADX shines.

How ADX Works in Trend Trading

The ADX line measures trend strength (not direction):

• Rising ADX = stronger trend.
• Falling ADX = weaker trend.

The +DI and –DI lines show whether bulls or bears are in control. Crossovers here matter.

The 25 and 40 levels are critical zones:

• Above 40 = Trend is strong, but watch for a consolidation.
• Pullback toward 25 = Often signals a reset before the next big leg higher (or lower).

When ADX rebounds from 25 and price breaks out of a flag/channel, that’s often the green light pros wait for.

Example: A Bull Flag Setup

In the clip, John shows a classic bull flag on eBay (EBAY):

• ADX rose above 40 during the initial impulse.
• As the market consolidated, ADX fell back toward 25.
• Meanwhile, the DI lines crossed, showing directional strength shifting again.
• When ADX turned higher from 25 and price broke out of the flag, it confirmed the continuation of the dominant trend.

This is how seasoned traders stack probabilities: price + indicator + confirmation = conviction.

How To Apply ADX With Barchart

Ready to put this into practice? Here’s how to get started at Barchart:

• Interactive Charts: Add ADX (14) alongside RSI and Moving Average Crossover Signals for layered confirmation.
• Custom Templates: Save a chart template with ADX, +DI/–DI, and your preferred moving averages so you can scan fast.
• Screeners: Filter stocks and ETFs with RSI between 40–60 and ADX turning up from 25 — perfect for spotting trends recharging.
• Flipcharts: Apply your ADX chart template and quickly scan lists of stocks to spot emerging breakouts.

Watch the Full ADX Tutorial

This clip is just the start. Watch the full ADX webinar on YouTube for a deeper dive into:

• Using ADX across multiple timeframes
• Combining ADX with RSI to spot false signals
• Innovative ways to catch trend exhaustion before everyone else

Watch the Full ADX Webinar Now:

On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.