+DI and -DI in Directional Movement System
Buy alerts are signaled
when the + DI crosses above the
-
DI and vice versa.
C
harting
a security with DIs using a 14-day time
span. Buy alerts are signaled when the + DI crosses
above the
-
DI and vice versa. There are several occasions when it is
possible to confirm such crossovers with a trendline
violation in the price.
Moving Average (MA) crossovers or price patterns
could just as easily be substituted. The crossovers are pretty good and not subject to any
whipsaws. Unfortunately, things do not always work out
as well as this. That's one reason why it is important
to make sure that such crossovers are confirmed by the
price.
A
nother way around this
is to smooth the two DIs.
This certainly reduces the whipsaws, but there is a
trade-off in that the signals are occasionally delayed
because this approach is less sensitive.
DMI Indicator - + DI and - DI
in Directional Movement System
