It is developed by Welles Wilder. To avoid unprofitable frustration of trend following in a sideways market, he devised DMI as a filter that permits entry into trades only when markets exhibit significant trending characteristics.
H is the highest price of the current period.
Hp is the highest price of the previous period. L is the lowest price of the current period. Lp is the lowest price of the previous period. The lesser of the above two absolute values is reset to equal zero. L-Cp where Cp is the closing price of the previous period.