The speaker provides an overview of the ADX, or average directional index. The ADX is an oscillator used to determine the strength of the prevailing trend. He discusses some popular strategies used by traders to execute buy and sell signals using this technical indicator.
When the ADX is above 25, the security is trending or has started a new trend. When this indicator fails at 40 or drops below 40, one can use this as an indication that a reversal is at hand.