The Directional Mvmt. Index (DMI) measures whether buyers or sellers are dominating the market by comparing upward and downward price movement. It consists of two lines that represent positive directional movement (+DI) and negative directional movement (−DI).
For automated trading strategies, DMI helps determine whether the market trend is bullish or bearish, and how strong that directional movement is.
What does the Directional Mvmt. Index measure?
DMI analyzes how strongly price is moving upward versus downward over a selected period.
It produces two primary values:
- +DI (Positive Directional Indicator) – measures upward price movement
- −DI (Negative Directional Indicator) – measures downward price movement
In general:
- When +DI is above −DI, buying pressure is stronger and the market may be trending upward
- When −DI is above +DI, selling pressure is stronger and the market may be trending downward
This allows traders to identify which side of the market is currently dominating.
How DMI is used in indicator-based triggers
In automation, DMI can be used to detect changes in directional trend strength.
For example, strategies may monitor when:
- +DI crosses above −DI, suggesting strengthening bullish momentum
- −DI crosses above +DI, indicating increasing selling pressure
- One directional indicator moves relative to another indicator, helping confirm whether a trend is strengthening or weakening
These types of triggers allow automated strategies to respond when control shifts between buyers and sellers.
Note:
- The Directional Mvmt. Index uses +DI and −DI values to measure upward and downward price movement.
- It is commonly used together with the Avg Directional Mvmt. Index (ADX) to understand both trend direction and trend strength.
Important:
- DMI helps determine whether buyers or sellers are dominating the trend.