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Additional Directional Movement (ADX) Final Part
. In this blog we would read about the features of ADX and the current scenario of the ADX in the market. . ADX On PRACTICE . The great feature of ADX is the ability to see buying and selling pressure at the same time. . Values above 40 indicate very strong trending while values below 20 indicate non-trending or ranging market conditions. . The indicator does not grade the trend as bullish or bearish, but merely assesses the strength of the current trend. - When ADX begins to strengthen from below 20 and moves above 20, it is a sign that the trading range is ending and a trend is developing. - The current scenario of ADX falling from the levels of 32 & now continuing at 25, tells that the momentum of price is toward a weaker section with a sideways movement. . It shows that the sellers are stronger than the buyers,this is seen in a downtrend. . The lesser volumes of trade & the bearish fundamentals also confirm that the overall sentiments are not supportive to the prices. - The factors are as follows: . · Fresh arrivals are coming to the spot market with harvesting in Idukki. · Commencement of fresh arrivals with higher moisture content is likely to keep check on the price. · Indian production is also expected to be higher by 10% to 55,000 tonnes. · Indian parity in the international market quoting at $3,200-3,225 a tonne (c&f). · Spot prices have plunged by 9% within a span of 4 weeks, quoting near the levels of 14K. . The investors are being cautious to enter the trade, which is hence keeping the price in a range between Rs. 13800-14800. . However, the current tight stock levels in pipeline, & demand from the overseas and domestic market is adding support to prices. . The DMI lines are good reference for price volatility. . In a nutshell, values of the ADX can be used to confirm the strength of an upward/down trend & also give the investor the confidence to enter into the trade. .
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