The world of trading can be a difficult place. It’s easy to get overwhelmed by the various strategies and tools that can be used to assess the markets, and it can be difficult to know which ones to trust. That’s why it’s so important to use directional indicator criteria when trading. Directional indicators provide traders with a powerful way to assess the markets, allowing them to make better decisions and improve their chances of success. First, traders must understand the nature of support and resistance. This is when the market’s price is effectively contained within certain levels of price action. For example, if the market has been trading between $1.20 and $1.25 for several days, we can assume that this is a support and resistance pair to watch. Knowing the nature of support and resistance is a vital part of the directional indicator criteria. When the market tests the support level, look for an upwards breakout. When the market tests the resistance level, look for a downwards breakout. If the market continues trading between the two levels, you may consider a different indicator strategy. The second important factor to consider is relative strength. This is when one asset outperforms another of a similar type. For example, if gold and silver are both in an uptrend, but gold is rising faster than silver, then gold can be said to have a higher relative strength. Relative strength can be useful when trying to identify strong trending markets and avoid weak ones. The third element of directional indicator criteria is momentum. Momentum is the rate of change in price over a given period of time. If the price of an asset moves quickly in one direction over a few days, then it is said to have high momentum. Low momentum may signal a reversal in the market’s direction. Momentum can be assessed using various indicators, such as the relative strength index (RSI) or the moving average convergence divergence (MACD). Finally, it is important to consider divergences. This happens when the assets price is moving in one direction, while the indicator is moving in the opposite direction. For example, if the price of gold is rising, but the RSI is falling, this could indicate a short-term reversal. As such, traders can adjust their strategies accordingly. By using the above directional indicator criteria, traders can gain a better understanding of the markets and more proficiently assess potential entry and exit points, thus increasing their chances of success.