Trend indicators are used to confirm that a market trend is still intact. These indicators work in a trending market. Trending markets are periods when the market moves up or down for several weeks to several months with mild retracements but no major trend corrections.

The most popular of all trend indicators has been around for over 100 years. Moving averages are smoothed price action and were written to confirm if a trend was still intact. Moving averages provide that information accurately and have become a durable indicator that has stood the test of time.

Moving averages work best in trending and momentum markets and do not work well in trading range or sideways markets. They fail miserably in consolidating and insipid markets.

Nowadays, moving averages are most useful when they are applied as a sub-indicator to other primary indicators. Moving averages are often combined to create crossovers such as the popular MACD. The trouble with all moving averages is that they lag price action. This means that price will reverse against the primary trend before the moving average will indicate and start to turn. There have been extensive efforts over the past 100 years to eliminate that lag, but unfortunately, the very nature of a moving average which is to smooth price action imparts the lagging tendencies.