This is a simple indicator to use while eyeballing charts. Pick your time frame and become an instant trend expert. This method of identifying trend was created by Welles Wilder and described in his 1978 book, New Concepts in Technical Trading Systems . Unlike Momentum, which uses only the closing price, Directional Movement uses only the high and the low price. It is fairly complicated mathematically, and therefore, you cannot eyeball it on charts.
Directional movement compares the portion of today's price bar that moves beyond yesterday's.
If today's high and low are greater than yesterday's, the portion of the today's bar that extends above yesterday's is the up directional movement. If today's high and low are less than yesterday's, the portion of the today's bar that extends below yesterday's is the down directional movement. To calculate the indicator, you find the total directional movement over the time period you selected for measurement. If it is positive, the trend is up. If negative, the trend is down.