Directional Movement Index (DMI)

The DMI was created by J. Welles Wilder and has two lines, the positive and negative directional movement. The two lines measure the strength of positive and negative trends. When the positive directional movement line is above the negative one, the bullish pressure is larger than the bearish one. And if the negative line is above, the bears will be dominating the market. This strategy is commonly implemented through crossovers. Bullish crossovers take place when the positive line crosses the negative one upward, offering buy points. Likewise, when a bearish crossover takes place, the DMI finds exit or shorting opportunities.

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