Trend filtering & confirmation

Not all trends are equal. Some are strong and smooth, while others are weak, choppy, or about to reverse. As trend traders, we want to focus only on high-quality trends — ones that are more likely to continue and give us clean entries and exits.

That’s where trend filtering and confirmation come in. This section we understand how to:

  • Avoid sideways markets
  • Confirm that a trend has real momentum
  • Stay out of false breakouts and range traps

🛠️ 1. Filtering Trends with ADX

ADX (Average Directional Index) is a simple yet powerful indicator that measures trend strength, not direction.

  • ADX above 25 → Indicates a trending market (useful for entry filtering)
  • ADX below 20 → Indicates a range-bound or weak market (avoid trading)

✅ Tip: You can combine ADX with moving averages. If price is above the 50 EMA and ADX > 25, it suggests a strong bullish trend.

💪 2. Momentum Confirmation with RSI or MACD

Use momentum indicators to confirm that the trend has energy behind it:
✅ RSI (Relative Strength Index)

  • Above 50 in an uptrend = bullish momentum
  • Below 50 in a downtrend = bearish momentum
  • Avoid trades if RSI is neutral (around 50) or showing divergence

✅ MACD (Moving Average Convergence Divergence)

  • Look for MACD line above signal line in an uptrend
  • Use MACD histogram as an early confirmation for continuation setups
  • Be cautious if MACD is flat or crossing back and forth

🧭 3. Avoiding Range Traps & Fakeouts

Many traders lose money trying to trade trends in ranging markets. Here are some clues to stay out of trouble:

  • Flat moving averages = no clear trend
  • Price oscillating around the moving average = choppy, non-directional
  • Fake breakouts = price breaks key level but quickly reverses back

🔍 Tip: Always zoom out to a higher timeframe (HTF) to confirm that the overall market structure supports a trend.