ADX (Average Directional Movement Index) The ADX is a useful technical analysis tool that helps to classify whether the current price action is choppy or trending. The lower the ADX is, the choppier the market. <ADX image retrieved from thinkorswim> Generally, anything over 25 ADX is considered a "trending condition". But more cautious momentum traders might want to wait until seeing at least 30 ADX before entering or adding size to scalps (very short duration trades). The main idea is that the higher the ADX is, the more likely that continuations will be. Conversely, mean-reverting strategies might become more attractive the lower that ADX drops. As a point of strategy, if holding a profitable momentum scalp but the ADX declines sharply or below a threshold of comfort, then it might be time to consider taking profits with reduced size or closing the trade. Related articles ATR (Average True Range) Hammer / Shooting Star (BoP) Balance of Market Power VWAP (Volume Weighted Average Price) Rule of 16 / Rule of 7.2