The Directional Movement Index measures trend strength and direction, helping commodity traders spot buy and sell signals in trending markets.
In this guide to understanding the Directional Movement Index (DMI), we’ll show you what this chart looks like, teach you how to interpret it, and provide tips on how to avoid false signals.
What is the Directional Movement Index (DMI)?
The Directional Movement Index (DMI), part of the ADX indicator, consists of two lines, the DMI plus line (DMI+) and the DMI minus line (DMI-). These lines generate potential buy and sell signals.
The chart below of the E-mini Russell 2000 Future shows an example of the DMI:
How to Interpret the DMI
The DMI can indicate potential buy or sell signals.
DMI Bullish Crossover: Potential Buy Signal
When the DMI+ crosses above the DMI-, it can indicate a potential buy signal.
DMI Bearish Crossover: Potential Sell Signal
When the DMI- crosses below the DMI+, it can indicate a potential sell signal.
Beware of False Signals
The DMI crossovers can generate many false signals, so other indicators should be used for confirmation of the DMI crossovers.
The Average Directional Movement Index (ADX) is an important addition to the DMI+ and DMI- indicators. In fact, the ADX is calculated using both DMI lines.
Regulated Brokers: Where Can I Trade Commodities?
Further Reading on Momentum Indicators
These momentum tools complement Directional Movement Index (DMI): ADX Indicator, MACD Indicator, and Stochastic RSI.
Technical analysis is most widely used in CFD and forex trading. If you’re ready to apply these techniques, browse our vetted CFD brokers or forex brokers.
Update history
This page was revised 4 times between August 2020 and April 2026.
Added a "Further Reading" section with broker recommendations and a dynamic list of top CFD brokers relevant to momentum indicator trading.
Removed regulated brokers section and consolidated Further Reading into focused momentum indicators subsection.
Restructured page with new introduction and table of contents, reorganized broker section with country-specific filtering, demoted subsection headings, removed broken ADX link, and improved clarity in signal descriptions.
Restructured DMI signal explanations into separate subsections, added chart reference introduction, included false signal warning, and added VIX/VXN to technical indicators list.
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