A high ADX reading does not tell us that the market is overbought and about to do down. Please note that a change in trend is different from a reversal in trend since a change in trend can be from up to down, up to sideways, or down to up. Similarly, a downtrend could change to a trading range or to an uptrend.

There is rarely an optimum time span for any indicator. However, for the ADX, the 14-period span and those very close to it appear to offer the best results. A reversal in direction does not always result in a change in trend. In this case, a reduction in directional movement was accurately predicted by the reversal. Unfortunately, the reduction was not sufficient to result in a change of trend, merely a slowing down in the existing (downward) one. Fortunately, this kind of action is the exception rather than the rule.

Low readings in the ADX indicate a lack of directional movement, and these can be helpful as well when it is fairly clear that a rising trend of directional movement is underway. Remember that the rising ADX did not signal rising prices, only rising directional movement. If the - DI had crossed below the + DI and the price had broken to the downside, the rising ADX would then have been associated with a declining trend in the price.