What does a trough in the ADX line often signal?

A trough in the Average Directional Index (ADX) line is indicative of a period where price action is relatively weak or lacking momentum, suggesting that the market is dormant or trendless. This situation often precedes a potential change in market dynamics, indicating that a trend may soon develop.

When the ADX line is low, it reflects weaker directional movement, and traders interpret this as a consolidation phase where price may be coiling or building up energy. As the market transitions out of this phase, it can signal the onset of a new trend, whether it's upward or downward, particularly if accompanied by a subsequent rise in the ADX.

Therefore, observing a trough in the ADX line can be a powerful signal for traders looking to identify upcoming changes in market trends, making the understanding of this concept crucial for effective technical analysis.