Directional Movement Index

The directional movement index (DMI) is an indicator of trend strength developed by J. Welles Wilder in 1978, determining the overall direction the price of an asset is moving. It consists of a positive directional movement line (+DI), a negative directional movement line (-DI), and an optional third line directional movement (DX).

When +DI is above -DI, it indicates more upward pressure than downward pressure in the price. When +DI is below -DI, it indicates more downward pressure in the price. This indicator may help traders assess the trend direction. Crossovers between the lines are also sometimes used as trade signals to buy or sell. Because crossovers between the lines sometimes send trade signals of buy or sell, this indicator may help traders assess the trend direction in strongly trending markets. However, in a market without trend, this indicator is not that useful.