Course: Technical indicators
Lesson Insights
Trend-following indicators, as the name suggests, are designed to follow the trend of the market. They are most useful when the market is in a strong trend, as they are designed to identify the direction of the trend and confirm the trend's strength.
These indicators do not generate long and short signals on their own, but rather provide information about the direction and strength of the trend. Traders often use trend-following indicators in conjunction with other technical analysis tools, such as Support and Resistance levels, to generate signals and make trading decisions.
It's important to note that trend-following indicators can be less reliable in range-bound markets, where the market is moving sideways rather than up or down. In these cases, other types of indicators, such as Momentum indicators or Oscillators, may be more useful for generating signals.
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