Wilders DMI Averages Indicator

Wilders DMI Averages Indicator

Wilders DMI Averages are the perfect indicator to determine the direction of a trend. The perfect volatility and price strength detector for bull and bear markets.

The Wilders DMI Averages indicator measures the strength of a trend. As the name suggests, it also shows the direction of price movement. The indicator consists of two lines, a green line and an yellow line, as well as histograms in the window below the price pattern.

The green line or plus direction indicator (+DI) shows price momentum is rising, while the minus direction indicator (-DI) shows momentum is falling. The lines and behavior of the histogram will tell you whether to open a buy or sell signal. In fact, the oscillator goes one step further to show price volatility, giving you more reason to enter or exit a trade.

The indicator is ideal for both long-term and short-term trades, novice and experienced traders. You can also use the oscillator on any time frame.

Wilders DMI Averages BUY / SELL Signals
As a trader, you will want to enter when the trend is strong. So how does the indicator display a strong trend? Just check the histogram. When the histograms are above 20, it indicates an extremely strong trend.

Now the next step is to decide whether to go long or short.

Buy signal
Go long when the green line is above the yellow line. Therefore, a strong buy signal occurs when the histograms are above level 20, and the green line is above the yellow line. Also, the histogram fills with lime histograms when the price is in an uptrend.

Sell signal
Open a short position when the yellow line is above the green line. A strong sell signal occurs when the histograms are above level 20 and the yellow line is above the green one. The histogram is colored pink when the market is in a downtrend.

You will want to exit when the two lines cross because this is a clear sign of a change in market trend.

Real market example

The above chart shows the price movement of the EURUSD on a hourly chart. The green line is above the yellow line, indicating that the currency pair is in an uptrend. The histogram above level 20 and lime color indicates a strong uptrend. These are all clear signs of an ideal buying position. As you can see from the chart, the price has shown a strong bullish move since the green line crossed the yellow line as shown by the arrow.

Ideally, you should close the position when the histogram changes color to a rose. The yellow line also crosses the green line, indicating the start of a downtrend. This means that you should exit the trade or prepare for a short trade.

Conclusions
Wilders DMI Averages are a great tool for determining the direction and strength of a price trend. Depending on the position of the indicator lines and the histogram, a trader can determine whether to open a long or short position. You should aim to open trades when the histogram is above the 20 level.