upmove

UpMove is a term used in technical analysis to describe positive price movement from one period to the next. It is part of the directional movement system introduced by J. Welles Wilder Jr. and is used to assess buying pressure.

UpMove_t is defined as the difference between the current period's high and the previous period's high: UpMove_t = High_t − High_{t−1}. DownMove_t is the corresponding downward movement: DownMove_t = Low_{t−1} − Low_t. If UpMove_t is greater than DownMove_t and UpMove_t is positive, then +DM_t equals UpMove_t; otherwise +DM_t equals 0.

Likewise, if DownMove_t is greater than UpMove_t and DownMove_t is positive, then −DM_t equals DownMove_t; otherwise −DM_t equals 0. The +DM and −DM values are smoothed over time to produce the positive and negative directional indicators (+DI and −DI), which are then used to derive the directional index (DX) and the average directional index (ADX).

Example: Suppose High_t = 53, High_{t−1} = 50, so UpMove_t = 3. Low_t = 39, Low_{t−1} = 40, so DownMove_t = 1. Since UpMove_t > DownMove_t and UpMove_t > 0, +DM_t = 3; −DM_t = 0.

In ranging markets, UpMove can generate signals that reverse quickly; ADX and smoothing prevent false positives but may lag price changes. The method uses only highs and lows and may be affected by gaps and data quality.

See also: Directional Movement, +DI, −DI, ADX, Wilder.