Directional Movement index (DMI) is one of forex technical indicator often used in forex technical analysis. Directional Movement index (DMI) filtrates on price exchange rates lays in the basis and lets enter the market only if substantial trends exist. It is developed for increasing the strength of all upward or downward trends in the Forex trading market.

Directional Movement index (DMI) developed by J. Welles Wilder for identifying when a definable trend is present in an instrument. That is, the DMI tells whether an instrument is trending or not. The scale for the DMI is from 0 to 100. The average directional movement index (ADX) is a moving average of the DMI.

The DMI also calculates the strength of the upward or downward movement, and displays the result as a trend strength line (ADX). The DMI is displayed on its own chart, separate from the price bars.

The Directional Movement Index can be used in both ranging and trending markets. In general, when the +DI line is above the -DI line, the market is moving upwards, and when the -DI line is above the +DI line, the market is moving downwards. The ADX line shows the strength of the move, and the market is considered to be trending when the ADX line is above 30, and ranging when the ADX line is below 30.

Most indicators have one major weakness – they are not suited for use in both trending and ranging markets. The key feature of the Directional Movement System is that it first identifies whether the market is trending before providing signals for trading the trend.

Directional Movement System measures the ability of bulls and bears to move price outside the previous day’s trading range. The system consists of three lines:
- The Positive Direction Indicator (+DI) summarizes upward trend movement;
- The Negative Direction Indicator (-DI) summarizes downward trend movement; and
- The Average Directional Movement Index (ADX) indicates whether the market is trending or ranging.