please explain why this would occur, page-38

I've compiled some information on the Wilder Directional Movement Index - which seems to contradict for my mind what Chalea states (although happy to be proved wrong as still trying to get my head around TA concepts lol):

http://www.investopedia.com/articles/technical/02/041002.asp

The Average Directional Index (ADX) measures the strength of a prevailing trend as well as whether movement exists in the market. The ADX is measured on a scale of 0 to 100. A low ADX value (generally less than 20) can indicate a non-trending market with low volumes whereas a cross above 20 may indicate the start of a trend (either up or down). If the ADX is over 40 and begins to fall, it can indicate the slowdown of a current trend.

This indicator can also be used to identify non-trending markets, or a deterioration of an ongoing trend. Although market direction is important in its calculation, the ADX is not a directional indicator.

An ADX above 30 on the scale indicates there is a strong trend in that particular time frame. Recall the principle that momentum precedes price....Therefore, when using ADX in your studies, note that when ADX forms a top and begins to turn down, you should look for a retracement that causes the price to move toward its 20-day exponential moving average (EMA). In an uptrending market, the technician will buy when the price falls to or near the 20-unit EMA, and in a downtrending market, one should look to sell when the price rises to or near its 20 unit EMA.



From Incredible Charts Forum:

http://forum.incrediblecharts.com/messages/9/253506.html

The trend is considered UP if
The DI+ is above the DI- and the ADX is Rising

The trend is considered DOWN if
The DI- is above the DI+ and the ADX is Rising

The trend is considered Neutral when
The ADX is Falling


http://www.paritech.com.au/paritech-site/education/technical/indicators/trend/directional.asp

In Wilder's book, he notes that this system works best on securities that have a high Commodity Selection Index (CSI) value. He says, "as a rule of thumb, the system will be profitable on commodities that have an ADXR value above 25. When the ADXR drops below 20, then do not use a trend-following system."

The CSI is designed for short-term traders who can handle the risks associated with highly volatile markets.

SO back to gold :)