How to Use ADX to Identify Reversals in the Trend

Joe shows how a specific setup in ADX can anticipate a reversal in the trend. Momentum divergence patterns in RSI and MACD can be excellent tools to play reversion to the mean patterns. However, this specific ADX momentum divergence setup can help to point out when the odds are increasing for a reversal of the trend.
If you have an interest in learning one-on-one from Joe, email [e-mail]. He will teach technical analysis in more detail or help with developing an investing/trading plan.
Joe Rabil is dedicated to providing unbiased analysis of stocks and markets. Helping investors use time-tested bottom-up technical analysis
The Technical Analysis that he teaches uses simple momentum indicators like the MACD and ADX to analyze and predict trends or trend changes using divergence and overbought/oversold readings. Joe is a recognized expert on Trend, Trend Momentum, and Multiple Time Frame Analysis. Here is a link to his book "Invest Like a Pro": www.amazon.com...
Link for Discount on TC2000 Software and brokerage:
www.tc2000.com...
He displays the analysis in an easy to understand way, even for beginner stock trading.
The videos help with:
-Understanding how to use multiple time frame analysis
- Learning simple technical Analysis
- Effective chart patterns
-Tools for improving timing and reducing risk using multiple time frames
- Measuring trade targets
- Identifying good stops for trades
And most importantly trying to give the right mindset to trade efficiently.

[@scottfolkman7149]

An oldie but a goodie...Short,concise and informative...Operative word being short...

[@investlikeapro7977]

Thanks Scott!

[@spencerwinston4334]

Your crystal clear analysis showcases the revealing quality of the ADX for traders at inflection points much like how night vision glasses illuminate for the Navy Seals at decision engagement time. Will now add this analysis along with Tim Ord's master volume work, volume profile, visionary Larry William's AD, and the pervasive MACD. Ready now to go bravely, with your trading night vision tool, into the fog of war. Finding the right synthesis of indicators gives one the alchemy of joy that arises from "seeing" the trading world "..again for the first time" to paraphrase poet T.S. Eliot. Philosopher extraordinaire Ralph Waldo Emerson also observed, realizing that while immersed in the plasticity of ethereal ideas, growth in all forms, from trading to higher spiritual growth, comes from seeing life as an "....experiment" in the relentless quest for the truth. Thanks Joe for your inspired efforts to educate traders across the world.

[@investlikeapro7977]

Spencer, missed this from last week. Love your thoughts! I appreciate the feedback. Joe

[@pojoksiku]

I just got stumbled here bcos searching for this. haven't seen ur channel before. still a novice, hope this help me to find my edge.. thank you for crystal clear explanation.

[@investlikeapro7977]

Great to hear! I hope I can help!

[@aksy970]

Thanks Joe - this is an excellent video! i like the way you use ADX to spot potential reversals early!

[@investlikeapro7977]

Great! Glad you liked it.

[@brandingdesignpro]

This is sick. Joe, you are an ADX/DMI evangelist, lol. I've been forward testing this and manually backtesting the methods you've been sharing. It's looking seriously promising especially using 2 timeframe confluence for trend analysis/confirmation on the bigger TF followed by a precise entry on the lower TF. This is super valuable; I will be investing in your book on Amazon once I've gone through even more of your channel. You re-iterate many key points, which is fantastic because trading is a practice of repetition... hopefully of good habits and methods, which leads to improved performance. Thank you for openly sharing your experience and wisdom on how to effectively use this tool methodically to gain a technical advantage, completely free. I've avoided divergence because I thought it was inconsistent and hard to read/see all the time. This video comparing the high or low peaks of the ADX compared to price peaks just made life a lot easier. Be very blessed, and continue to prosper.

[@investlikeapro7977]

Haha…thanks! Good to hear.

[@johncoffee900]

Dear Sir, thank you for the valuable information, truly a masterpiece. You have true insight in the workings of the ADX indicator. After 10 years of ups and downs in trading I have never seen something better. Please keep well.

[@investlikeapro7977]

I truly appreciate the kind words. I am glad you find the information useful.

[@CryptoRich1]

I've been looking for a video that could give a better explanation of the ADX. so thanks! the negative peak vs positive was game changer information 🤑👍

[@investlikeapro7977]

Great! Good to hear.

[@AKUSIGAMEHUNT]

I love the manner in which you explain the ADX Divergence but try using the ADX style line 8 or 14 periods and 25 levels; which did not give me a nice result but I tried removing the ADX style line instead and used the ADX +DI and -DI with 35 periods it spots more divergence in anytime frame I hope to drop a video about it soon. Thanks, please check it

[@dakscalcaldona2141]

MEANING ADX IS THE KEY SIGN FOR A REVERSAL ONCE it's NOT GETTING ABOVE 25 LVL WHETHER THE POSITIVE OR NEGATIVE DMI IS ABOVE 25? THANK YOU FOR ANOTHER REAL DEAL STRATEGY HOPE TO TEACH US MORE STRATEGY USING THIS INDICATOR.

[@investlikeapro7977]

Correct. Once there is a solid trend in place, either up or down, watch each peak in ADX to see if it can get above 25 area. If not, then be on the alert for a reversal. Yes, I will be doing a number of new videos on ADX in the coming weeks/months. Joe

[@dakscalcaldona2141]

@@investlikeapro7977 thank you

[@ramanaven2001]

Thanks

[@investlikeapro7977]

Sure thing

[@swiftsidewinder]

Hi Joe, I've been binging on your vids lately. Your book just shipped and is on the way. Been learning alot from you. Does your ADX/DMI settings follow simple or exponential? As for the 13, 8 settings, am I correct to say 13 is ADX and 8 are the DI lines?

[@investlikeapro7977]

I use standard issue ADX/DMI used on all software. However, my settings are 13 for DI and 8 for ADX (smoothing)

[@leroypierre380]

Thks, for your vidéos. I note also on those 2 exemples that macd is also showing exact same divergence, right?

[@investlikeapro7977]

Yes they are

[@bassem808]

Thanks Joe for valuable lessons, one question please , I notice that divergence in DMI give some times signals, do you see to rely on adx divergence only or we can use DMI divergence as well?

[@investlikeapro7977]

Yes! Yes! definitely use DMI divergence as well. It is much more sensitive and provides good insight the reversion pattern back to previous support.

[@raycorrea2625]

Thanks nice video What if no new high in price but slightly lower Higher high or equal high on price while ADX fails to go above 25 Can still look for reversal? Does it have to be HH in price uptrend and Divergence of ADX, when using ADX failure to cross 25 ? or can it be any moment ADX peak fails to go above 25 ?

[@investlikeapro7977]

This works best when there has been a trend in place and then the ADX does not confirm a new high in price.

[@raycorrea2625]

@@investlikeapro7977 Thanks !!

[@joshreed7102]

Can you use ADX with NQ 2min charts?

[@investlikeapro7977]

Yes, you can. But, you need to keep 2 things in mind. 1) the micro time frames tend to have more noise associated with the price action and 2) when there is a gap in the morning, there will be some distortion at the start of the day for the ADX indicator. So, at times, it will be a little less reliable but still a useful tool the majority of the time.