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Directional Movement Index Indicator

The DMI indicator deals with the trending quality of a market. This indicator has three lines: DMI+ (DMIPlus), DMI- (DMIMinus), and ADX. If the DMI- is above the DMI+, this indicates a downward trending market while a DMI+ above the
DMI- indicates an upward trending market.

Signals are generated when DMI+ crosses DMI-; DMI+ crossing above DMI- generates a bullish signal while DMI+ crossing below DMI- generates a bearish signal. Additionally, for a signal to be considered valid, the ADX line must be
rising at the time of the crossover. If ADX isn't rising when DMI+ crosses DMI- some traders will consider the signal valid if ADX begins rising within a few bars. Preliminary exit signals can be interpreted if ADX begins declining or if DMI+ and DMI- cross again in the opposite direction.


Additional References:

Kaufman, Perry J. The Commodity Trading Systems & Methods.
Wilder Jr., Welles. New Concepts in Technical Trading Systems.
Technical Analysis Studies Available
 

You can adjust parameters of each indicator to suit you.

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