What information do +DI and -DI provide traders?

The +DI (Positive Directional Indicator) and -DI (Negative Directional Indicator) are components of the Directional Movement System developed by J. Welles Wilder. They are primarily used to measure the strength of the upward and downward movement of a security, relative to its price movement over a specified period.

The information that +DI and -DI provide is related to how much of the true range is being directed in either an upward or downward movement. Specifically, +DI indicates the strength of upward price movements, while -DI indicates the strength of downward price movements. This assessment allows traders to gauge the strength of current trends, helping them make informed decisions about entering or exiting trades.

Combining the readings of +DI and -DI allows traders to identify potential buy or sell signals based on crossovers, which can indicate shifts in trend direction. Therefore, this understanding of directional movement is crucial for assessing how strongly a market is trending in either direction, which directly relates to the percentage of the true range that is attributed to upward or downward price movement.