There are three components to this indicator, and they are plus directional movement, minus directional movement, and the average directional index. How to read that is the movement is deemed positive if taking the current high and subtracting the prior high is higher than the prior low minus the current low. Negative is if the prior low minus the current low is bigger that the current high subtracting the prior high.
Created by Welles Wilder, the Average Directional Index or ADX for short, is an indicator that helps the investor or trader look for movement within a market. This indicator is helped to measure the potential shift of a trend and even the strength of the move. Strength can be used in different terms such as volume strength, money flow strength, or trading range.