Using ADX to identify retracements on futures this week resulted in profits on all four markets.  The four ADX magenta peaks came in on the 180 minute charts this morning and all four made profits.  Click on the chart to expand.  Using a combination of the TradersHelpDesk ADX indicator with the Trend ATR, we can identify where price is most likely to retrace to.  The plus sign on the chart below shows where we anticipate the retracement to go once the magenta peak comes in on the ADX (magenta dot on the ADX line indicates a magenta peak has occurred).

using ADX to identify retracements

Using ADX to Identify Retracements

On the Gold 180 minute chart, the ADX magenta peak came in and a retracement up to the ATR was anticipated.  The retracement was from about 1055 up to 1064 or 90 ticks on Gold.  At $10 a tick that is a $900 move back to the ATR and the ADX magenta peak identified this was likely to occur.

On Crude, the ADX magenta peak kicked off around 41.98 and went up to 42.41.  That is a forty-three cent move at $10 a tick or $430 per contract.

On the Dow Jone futures contract, using the ADX to identify retracements resulted in a sixty point move or $300 per contract.

On the Nasdaq Futures, the ADX magenta peak indicated a retracement from 4674 to 4698.25.  Over a twenty point move or $400 per contract.

The strongest move of course was on Gold because not only did we have a magenta peak but it was also oversold because the ADX value was above 70.  (Remember the ADX indicator is a non-directional indicator.)

The combination of the TradersHelpDesk ADX and Trend ATR indicators give futures, forex, and commodities a clear advantage when daytrading these markets because we can identify when they are overbought, oversold, or trending.  If overbought or oversold, we can also identify where price will likely go next, giving us a leading edge in the markets.