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Directional Movement System (DMS)
Directional Movement System (DMS) is indicator in technical analysis which is composed of 3 indicators:
- Negative directional indicator (DI-)
- Positive directional indicator (DI+)
- Average directional index (ADX)
DMS is developed by Welles Wilder and it is used to determine if financial instrument is trending.
Directional Movement System (DMS)
Interpretation
If DI+ crosses above DI-, you should go long. Signal should also be verified by ADX: if ADX is rising while DI+ and ADX are above DI-, signal is confirmed. If DI+ crosses below DI-, you should close position.
If DI- crosses above DI+, you should go short. Signal should also be verified by ADX: if ADX is rising while DI- and ADX are above DI+, signal is confirmed. If DI- crosses below DI-, you should close position.
Example
Open chart for google with DMS indicator.