Trend Indicators in Technical Analysis (TA)

Trend indicators are technical analysis tools designed to identify the direction and strength of any market trend. These tools are helpful in confirming whether an asset is trending or ranging, allowing them to make better trading decisions.

Trending/Ranging Financial Markets

(i) Trending Market: When the price of a financial asset or market follows a specific trend over a long period of time.

(ii) Ranging Market: When the price of an asset or market moves up and down without following a specific long-term trend (trading within a range formed by an upper and a lower band).

Trend Indicators Are Reliable Only in Trending Markets

□ If a financial market is trending, trend indicators can provide highly reliable trading signals.

□ If a financial market is ranging, trend indicators may mislead traders. (In a ranging market, traders should instead use momentum indicators, which are better suited to identifying short-term price movements within the range.)

Table: Trend Indicators at ExpertSignal.com