Directional indicators: trading +DI and -DI crossovers

The directional indicators, +DI and -DI, are part of Welles Wilder's directional movement system. Traders use them to compare upward and downward price movement, assess direction and spot possible crossover signals.

This guide explains how the two lines work, how traders commonly read +DI and -DI crossovers, and how the average directional index (ADX) can add trend-strength context.

Takeaways

+DI measures upward directional movement and -DI measures downward movement.
The higher of the two lines shows which side has more directional strength.
A crossover of +DI above -DI is often read as a bullish signal; -DI above +DI is often read as bearish.
Many traders use ADX to check whether a crossover is happening in a stronger trend.
Wilder set the initial stop at the high or low of the signal day.
Crossovers can whipsaw in ranging markets, so confirmation and risk management matter.

What are the directional indicators?

The directional indicators, written +DI and -DI, are two lines developed by J. Welles Wilder to measure the direction of price movement (Internet Archive, accessed 3 July 2026).

Line	Full name	What it reflects
+DI	Positive directional indicator	Upward price movement.
-DI	Negative directional indicator	Downward price movement.
ADX	Average directional index	Trend strength, not direction.

A simple way to think about the system is this:

+DI and -DI show which direction has more strength.
ADX shows how strong the wider trend may be.

The relationship between +DI and -DI, and the points where they cross, can help traders assess direction and possible entry points. The standard setting is 14 periods. +DI and -DI show direction; ADX shows strength. This guide focuses on the two directional lines and their crossovers.

How +DI and -DI are calculated

The lines are built from directional movement. For each period, the indicator compares:

The distance between the current high and the previous high.
The distance between the current low and the previous low.

Positive directional movement is based on how far the current high moves above the previous high. Negative directional movement is based on how far the current low moves below the previous low.

These values are smoothed over the chosen period and divided by the true range. This gives +DI and -DI as values, usually shown on a scale from 0 to 100.

If this happens	The indicator may show
Upward movement is stronger than downward movement	+DI tends to rise against -DI.
Downward movement is stronger than upward movement	-DI tends to rise against +DI.
Movement is mixed or limited	The lines may stay close together or cross more often.

Reading direction: which line is on top

The simplest way to read the indicator is to look at which line is higher.

Past performance is not a reliable indicator of future results.

+DI on top. When +DI is above -DI, upward movement is stronger than downward movement over the measured period. Traders often read this as an upward bias. A wider gap can suggest stronger buying pressure, but it does not guarantee that the move will continue.
-DI on top. When -DI is above +DI, downward movement is stronger than upward movement over the measured period. Traders often read this as a downward bias. A wider gap can suggest stronger selling pressure, but the signal still needs context.

Line position	Common interpretation	Main caution
+DI above -DI	Upward movement has more strength.	The move may still fade or reverse.
-DI above +DI	Downward movement has more strength.	The move may still lose momentum.
Lines close together	Direction may be unclear.	Crossovers may be frequent and noisy.

The crossover system: buy and sell signals

Wilder's directional signals come from the two lines crossing.

Past performance is not a reliable indicator of future results.

Crossover	Common reading	How traders may use it
+DI crosses above -DI	Bullish signal	As part of a possible long-entry setup.
-DI crosses above +DI	Bearish signal	As part of a possible short-entry setup.

Bullish crossover

When +DI crosses above -DI, traders commonly read it as a bullish signal. It suggests upward movement may be gaining strength relative to downward movement. Some traders use this crossover as part of a long-entry setup. Many also look for ADX, price structure or another form of confirmation before acting.

Bearish crossover

When -DI crosses above +DI, traders commonly read it as a bearish signal. It suggests downward movement may be gaining strength relative to upward movement.

Some traders use this crossover as part of a short-entry setup, again looking for confirmation from ADX or the wider market context.

Crossovers are central to the system, but they are not reliable in every market. In quieter or sideways conditions, +DI and -DI can cross frequently and create false signals.

Filtering crossovers with ADX

The directional lines are often more useful when traders also consider trend strength. Wilder's own system used ADX above 25 as a filter before acting on a crossover. The idea was to avoid taking every crossover and instead focus on those that appear in more clearly trending conditions.

ADX condition	What it may suggest
ADX above 25 and rising	A stronger trend may be developing.
ADX below 25	The market may be ranging or less clearly trending.
ADX flat or falling	Trend strength may be weakening.

For example, a +DI crossover in a rising-ADX environment may carry more weight than the same crossover when ADX is low and flat.

In this setup:

The DI lines provide direction and timing.
ADX provides trend-strength context.
Other tools can help assess whether the setup fits the wider market picture.

Without that extra context, crossovers can more easily whipsaw. A crossover with ADX above 25 and rising is often seen as stronger than one in a flat, low-ADX market. Direction comes from the DI lines; trend-strength context comes from ADX.

Wilder's stop-loss rule

The system includes a specific rule for the initial stop.

Wilder placed the initial stop:

At the low of the signal day for a long position.
At the high of the signal day for a short position.

The signal day is the day the crossover forms. The signal was treated as remaining in force as long as that level held, even if the lines briefly crossed back.

Position type	Wilder's initial stop
Long position	Low of the bullish crossover day.
Short position	High of the bearish crossover day.

This approach links the stop to the price action that produced the signal. It gives traders a clear invalidation level, but it does not remove trading risk.

Standard stop-loss orders aren’t guaranteed. Guaranteed stop-loss orders incur a fee if activated.

Weak vs strong crossovers

Not all crossovers carry the same signal quality, so it’s worth looking at where they can fail.

A crossover may be stronger when

ADX is rising and above 25.
The wider trend supports the signal.
The price structure confirms the direction.
Volume or another independent tool supports the move.

A crossover may be weaker when

ADX is low or flat.
The market is moving sideways.
The DI lines are crossing repeatedly.
Price is near a range boundary or unclear support and resistance.

In a strong trend, crossovers can help traders identify a possible change in direction. In a sideways or choppy market, however, the lines may cross back and forth, producing repeated false signals.

ADX can help filter weaker signals, while price structure, volume and the wider trend can add useful context. Even with confirmation, false signals can still occur.

Directional indicators: limitations and risk management

The directional lines share the limitations of many trend-following tools.

Limitations

Limitation	Why it matters
They lag price	Signals appear after movement has already started.
They can whipsaw	Ranging markets can create repeated false signals.
They do not give price targets	Traders still need a separate exit plan.
They need context	Crossovers alone do not show whether a trade suits the wider market.
They may be less useful when ADX is low	Low ADX can point to weaker or less clearly defined trends.

Using directional indicators in context

Directional indicators may be more useful when read alongside ADX, price structure, support and resistance, volume, another independent indicator, or signals across more than one timeframe. This can help traders build a broader view, but it cannot remove false signals or guarantee a particular outcome.

Managing risk

A crossover is not, on its own, a trading plan. Traders still need to consider where they would exit, how much they are willing to risk, whether the setup fits their wider approach, and how market conditions may affect the signal. Wilder’s signal-day stop is one possible method, but it should be considered alongside broader risk management. Standard stop-loss orders aren’t guaranteed. Guaranteed stop-loss orders incur a fee if activated.

This content is provided for general information and educational purposes only. It does not constitute investment advice, financial advice, a recommendation, or an offer or solicitation to buy or sell any financial instrument. Contracts for difference (CFDs) are traded on margin. Leverage can amplify both profits and losses.

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FAQ

What are the directional indicators +DI and -DI?

The directional indicators are two lines from Welles Wilder's directional movement system. +DI, the positive directional indicator, reflects upward price movement, while -DI, the negative directional indicator, reflects downward price movement. The higher of the two shows which direction has more strength over the measured period. Traders often use their crossovers alongside ADX, which measures trend strength.

How do +DI and -DI crossovers work?

When +DI crosses above -DI, traders commonly read it as a bullish signal, as upward movement may be gaining strength relative to downward movement. When -DI crosses above +DI, traders commonly read it as a bearish signal, as downward movement may be gaining strength. Many traders use ADX as a filter because crossovers in flat, low-ADX markets can whipsaw and produce false signals.

Where does Wilder place the stop on a DI signal?

Wilder set the initial stop for a long position at the low of the day the bullish crossover formed. For a short position, he set it at the high of the day the bearish crossover formed. The signal was treated as still valid as long as that signal-day level held, even if the lines briefly crossed back. This gives a rules-based invalidation level, though stop-loss orders are not guaranteed.

Are +DI and -DI crossovers reliable?

Their reliability depends on the market context. On their own, they can whipsaw in ranging markets and produce frequent false signals. They are often more useful in stronger trends, particularly when traders use ADX, the wider trend, price structure or volume for context. Directional indicators can help track direction, but they are not a complete trading system. Trading CFDs involves the risk of losing your invested capital.