What is the definition of a negative directional movement day?

A negative directional movement day is defined specifically as a situation where today's low is lower than yesterday's low. This indicates that the price action is declining, reflecting weakness in the market for that security. The concept is a key part of technical analysis, particularly in the context of the Average Directional Index (ADX) and directional movement indicators, which traders use to assess the strength of a trend.

In this context, the correct definition encapsulates the essence of negative directional movement—showing a downward shift in price dynamics from one day to the next. Being aware of these price movements helps traders to make informed decisions regarding market entries and exits, as well as risk management strategies.

While other definitions mentioned could relate to various price movement aspects, none focus specifically on the decline represented by a lower low than the previous day, which is essential in assessing market sentiment and momentum.