Directional Movement Index

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Directional Movement Index

A moving average indicating whether and how strongly a security's price is changing. The DMI is based on the assumption that if a price is trending in one direction or the other, the highest (or lowest) price on a given trading day is always higher (or lower) than the highest (or lowest) price on the previous trading day. For example, if the intraday high for security X is $10 on Monday and $12 on Tuesday, the DMI reckons that security X is trending upward. It is calculated on a scale of 0 to 100, depending on the strength of the trend, and may be positive (indicating upward movement in price) or negative (indicating downward movement). It helps analysts determine whether to buy or sell securities.
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