A trend indicator refers to an indicator used in technical analysis to detect trends (in security prices) and measure their direction. Trend indicators works well when the market is trending and performs poorly when the market is ranging. That is, when the market price moves in a narrow range.
The most known trend indicator is certainly the moving average. The moving average (MA) smoothes the security prices in order to reduce the time-series noise. This process makes it easier to highlight the trend in a chart.
Trend indicators are also called trend following indicators.
