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The Directional Movement Index (DMI) determines the direction in which the trend is headed, while also providing an idea about the strength and momentum of the trend. In fact, J. Welles Wilder had invented this indicator in order to understand the direction of stocks or indexes.
The indicator tries to identify direction by analysing highs and lows, labelled as positive directional movement (+D) and negative directional index (-D), respectively. The difference between these two is named as directional movement (DX). Herein, when +D is above –D, the trend is said to be upward, with sentiments gradually rising towards optimism. And
