How to use it
When ADXR line is above 25 then you will want to use a trend-following system. If the ADXR drops below 20 then you will want to focus on strategies that work when the market is trading within a range.
A rising ADXR, with DI+ above the D- indicates a strong bullish market.
A rising ADXR, with DI- above DI+ indicates a strong bearish market.
Another use for this indicator is looking at when there is a cross of the ADXR and ADX lines that can indicate a change in the market.
ADXR = ADX + ADX 14 days ago / 2
One of the main issues with this indicator is the smoothing nature makes it less responsive than ADX so any signals are delayed. The benefit is any readings have a greater weight behind them as the trends will have matured.
The ADXR is a smoothed version of the ADX indicator. It consists of a group of directional movement indicators that form a trading system developed by Welles Wilder.
It measures trend strength without taking into account trend direction. The other two indicators, Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) are then used to measure strength and direction of the trend.