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Negative Directional Indicator (-DI)


The Negative Directional Indicator (-DI) is a component of the Average Directional Index (ADX) that quantifies the presence of downward price movement. It is calculated by measuring the expansion in a security’s price range and the direction of that expansion. Thus, a high -DI value signals strong bearish sentiment, suggesting that prices are moving downwards.


The phonetics of the keyword: Negative Directional Indicator (-DI) is: Ne-ga-tive Di-rek-shon-al In-di-ka-tor (Mi-nus D-I)

Key Takeaways

  1. The Negative Directional Indicator (-DI) is a component of the Average Directional Index (ADX) and it helps measure the strength of a downward trend in the market. It functions as a signal for bearish movements.
  2. -DI is particularly useful when determining selling points. When the -DI line crosses above the +DI line, it signals that bears are controlling the direction of the market, hence it is typically a good time to sell or short-sell.
  3. A higher -DI number means more negative market movement and is usually seen as an indication of increased selling pressure. However, if -DI is below +DI, it signifies that the upward trend is stronger than the downward trend.


The Negative Directional Indicator (-DI) is a critical metric in business and finance as it highlights potential downtrends in a specific security or market. This tool is part of the Average Directional Index (ADX) system, developed by Welles Wilder, and is used by traders and analysts to assess the strength and direction of the price movement. A high -DI is a signal of strong bearish momentum, implying that the price is likely to decrease. Identifying downtrends in a timely manner allows traders to manage risks effectively by adjusting their positions or implementing appropriate short strategies. Thus, the -DI forms a crucial part of technical analysis and strategic decision-making process in the world of investing.


The Negative Directional Indicator (-DI) is a crucial component used in the analysis and trading of securities. Predominantly used in conjunction with the Positive Directional Indicator (+DI), as part of the Average Directional Index (ADX), it helps traders identify the strength of a trend and potential opportunities for executing a profitable trade. While the ADX gauges the strength of a trend, the -DI specifically focuses on identifying the strength of a downward, or negative, price movement.The fundamental purpose of the -DI is to provide a measurable indicator of a stock’s downward momentum. When the -DI crosses above the +DI, it signifies the start of a bearish (downward) trend, hence, traders might consider selling or shorting their position. Conversely, when the -DI crosses below the +DI, it may indicate the ending of a bearish trend, signaling a potential buying opportunity or closing of short positions. This is vital for operational efficiency and decision-making in market trading, enabling traders to anticipate market movements and make informed decisions.


Negative Directional Indicator (-DI) is a concept in technical analysis, used to gauge or identify a downtrend in the price of an asset, such as a stock in the stock market, cryptocurrency, or commodities. Here are three real-world examples: 1. Stock Market:Negative Directional Indicator (-DI) Let’s consider a scenario involving the shares of company A. Assume that company A’s stock price has been on a steady rise for the past few months. A trader notices that the -DI has spiked, suggesting a possible downtrend. True enough, in the following months, company A reports less-than-expected earnings, and the stock price declines. The -DI helped the trader identify the potential of a downtrend. 2. Cryptocurrency Market: For instance, Bitcoin, a widely traded cryptocurrency, started the year 2021 on a bull run, with prices hitting all-time highs. However, a technical analyst, observing the movement, could have noticed an uptick in the -DI, suggesting negative price momentum despite the uptrend. As predicted, in May 2021, Bitcoin prices plummeted, a trend that could have been anticipated by a keen understanding of the Negative Directional Indicator. 3. Commodity Markets: A trader in commodity markets, like gold or silver markets, might use -DI to gauge potential price decreases. For example, after an apparent increase in gold prices due to some geopolitical tensions, the -DI could indicate a potential reversal of this trend. Soon after, geopolitical tensions ease, and gold prices decrease, aligning with the prediction made using -DI.

Frequently Asked Questions(FAQ)

What is Negative Directional Indicator (-DI)?
The Negative Directional Indicator (-DI) is a component of the Average Directional Index (ADX) that is used to measure the downward price movement in a security. It aids traders to understand the negative or downward momentum in the market.
How is -DI calculated?
-DI is calculated by multiplying the ratio of the average true range to the average directional movement (negative DM) by 100. This is done after smoothing out the average over a certain period, typically 14 days.
What is the significance of a higher value of -DI?
A higher value of -DI implies stronger negative or downward momentum in the price of a security. It indicates that the downward movement is overwhelming the upward movement.
How does a trader interpret the -DI?
Traders usually use -DI in conjunction with the Positive Directional Indicator (+DI). When -DI crosses above +DI, it’s often interpreted as a signal to sell, since this indicates that downward momentum is increasing.
Can -DI be used as a standalone indicator?
-DI is usually not used as a standalone indicator. It is part of the Average Directional Index (ADX), which also includes the +DI. Comparing these indicators can provide valuable insights about the market trend.
How does -DI differ from other technical indicators?
Unlike many other technical indicators, -DI does not consider the close price of a security. Instead, it focuses exclusively on the negative price movement. This makes it a unique tool that complements other indicators in a comprehensive analysis.
Is -DI a lagging or leading indicator?
-DI, as part of the ADX system, is considered to be a lagging indicator since it relies on historical price data. Despite this, it’s still a useful tool in predicting potential trends and volatility.
What can a lower -DI value imply?
A lower -DI value often signifies that the negative or downward momentum is weakening, or even that the price trend could be reversing to an upward direction.

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