Directional Movement Index MT4 indicator is an indicator that includes three indicators, so basically it is a three in one indicator consisting of Average Directional Index, Plus Directional Indicator, and Minus Directional indicator. The +DI and -DI are indicators are used to identify the direction of the trend where the ADX states if there is a trend from the first place or not. Putting them in one indicator helps you to identify a trend and measure its strength along with the direction as well.
Current High – Previous High = UpMove
Previous Low – Current Low = Downmove
If UpMove > DownMove and UpMove > 0, then +DM = UpMove, else +DM = 0
If DownMove > UpMove and DownMove > 0, then -DM = DownMove, else -DM = 0
Based on the momentum indicator principles, the Directional Movement Index MT4 indicator is an indicator that actually uses the momentum technique to be able to understand the price movements and dynamics. Such comprehension makes the traders able to modify their strategies and estimate the coming price movement.
DMI is constituted of ADX and Directional Movement as a combo to make the traders able to know which trend direction is stronger and to know the actual strength of the trend.
Related Indicator: Trading With Fisher Indicator