The +DI is the percentage of the true range that is up. The -DI is the percentage
of the true range that is down. A buy signal is generated when the +DI crosses up
over the -DI. A sell signal is generated when the -DI crosses up over the +DI. You
should wait to enter a trade until the extreme point is reached. That is, you should
wait to enter a long trade until the price reaches the high of the bar on which
the +DI crossed over the -DI, and wait to enter a short trade until the price reaches
the low of the bar on which the -DI crossed over the +DI.
The DI was developed by J. Welles Wilder and is described in his 1978 book New Concepts
In Technical Trading Systems.
Formula:
To recap: The best technical indicators are firstly trend lines/support/resistance/volume.
After that would come the versatility of the MACD. It can be left on the chart at
all times. Use only buy signals in the uptrend and sell signals in the downtrend.
Use both signals in a range.
In Trends use 2-3 of the following maximum:
1. Trend lines
2. Moving Averages
3. MACD (buys in uptrend or sells in downtrend)
4. ADX (above 30)
5. PSAR (for stops in strong trends) OR
6. ATR levels for stops
In Ranges, use 2-3 of the following maximum:
1. Support/Resistance
2. MACD – both buy and sell signals
3. Bollinger Bands
4. RSI
5. Slow Stochastics
6. ADX below 30
7. ATR levels for stops