What is a trend following indicator in the context of internal indicators?

In the context of internal indicators, a trend-following indicator is one that is used to determine the direction of the market over a period of time based on past price movements. This type of indicator aims to identify and confirm trends in market prices, allowing traders and investors to align their strategies with the prevailing trend.

Trend-following indicators typically smooth out price data to filter out noise and help discern ongoing trends, making it easier to make trading decisions. They are often used to generate buy or sell signals by analyzing the momentum of price movements.

By focusing specifically on the trend, these indicators can provide valuable insights into whether to remain in a trade or exit, depending on whether the market is trending upwards or downwards. The distinction of trend-following from other concepts such as market breadth, trend sensitivity, or sentiment lies in its primary function of tracking and confirming the momentum and direction of price movement specifically.