THANKS an interesting article. I have copied the meat of the article below.
Creating a Usable Strategy
Although the ADX appears to work well on its own, market volatility can cause second-guessing and false signals. However, when combined with chart types that more easily highlight trends, it becomes a lot easier to identify profitable opportunities.
Using a combined analysis is as simple as determining whether the chart pattern's sentiment is the same as the indicator's sentiment. Therefore, if you are using Heikin-Ashi and ADX, simply check to see what the trend direction is on the chart and then take a look at the trend strength shown on the ADX. If both are telling you that there is a strong trend, then it may be a good idea to enter.
Here's an example:
Figure 6
Here we can see the trends are smoothed out by the use of averaging techniques (like Heikin-Ashi) and are being confirmed through the use of indicators (like ADX). This gives us a clear and reliable picture of the current market situation, without any unnecessary clutter (market noise).
Conclusion
As you can see, chart analysis is much easier when using noise-removal techniques. They can help you avoid costly false signals and other mistakes, while allowing you to quickly and accurately locate and capitalize on trends.
by
Justin Kuepper
