diff --git a/libraries/matrix/impl/build.gradle.kts b/libraries/matrix/impl/build.gradle.kts
index 76eb030615..5d386169ad 100644
--- a/libraries/matrix/impl/build.gradle.kts
+++ b/libraries/matrix/impl/build.gradle.kts
@@ -48,6 +48,7 @@ dependencies {
     testImplementation(libs.test.robolectric)
     testImplementation(projects.libraries.matrix.test)
     testImplementation(projects.services.analytics.test)
+    testImplementation(projects.services.toolbox.test)
     testImplementation(projects.tests.testutils)
     testImplementation(libs.coroutines.test)
     testImplementation(libs.test.turbine)
diff --git a/libraries/matrix/impl/src/test/kotlin/io/element/android/libraries/matrix/impl/timeline/postprocessor/LoadingIndicatorsPostProcessorTest.kt b/libraries/matrix/impl/src/test/kotlin/io/element/android/libraries/matrix/impl/timeline/postprocessor/LoadingIndicatorsPostProcessorTest.kt
new file mode 100644
index 0000000000..4859355917
--- /dev/null
+++ b/libraries/matrix/impl/src/test/kotlin/io/element/android/libraries/matrix/impl/timeline/postprocessor/LoadingIndicatorsPostProcessorTest.kt
@@ -0,0 +1,127 @@
+/*
+ * Copyright 2024 New Vector Ltd.
+ *
+ * SPDX-License-Identifier: AGPL-3.0-only
+ * Please see LICENSE in the repository root for full details.
+ */
+
+package io.element.android.libraries.matrix.impl.timeline.postprocessor
+
+import com.google.common.truth.Truth.assertThat
+import io.element.android.libraries.matrix.api.core.UniqueId
+import io.element.android.libraries.matrix.api.timeline.MatrixTimelineItem
+import io.element.android.libraries.matrix.api.timeline.Timeline
+import io.element.android.libraries.matrix.api.timeline.item.virtual.VirtualTimelineItem
+import io.element.android.services.toolbox.test.systemclock.FakeSystemClock
+import org.junit.Test
+
+class LoadingIndicatorsPostProcessorTest {
+    @Test
+    fun `LoadingIndicatorsPostProcessor does not alter the items is the timeline is not initialized`() {
+        val sut = LoadingIndicatorsPostProcessor(FakeSystemClock())
+        val result = sut.process(
+            items = listOf(messageEvent, messageEvent2),
+            isTimelineInitialized = false,
+            hasMoreToLoadBackward = true,
+            hasMoreToLoadForward = true,
+        )
+        assertThat(result).containsExactly(messageEvent, messageEvent2)
+    }
+
+    @Test
+    fun `LoadingIndicatorsPostProcessor adds Loading indicator at the top of the list if hasMoreToLoadBackward is true`() {
+        val clock = FakeSystemClock()
+        val sut = LoadingIndicatorsPostProcessor(clock)
+        val result = sut.process(
+            items = listOf(messageEvent, messageEvent2),
+            isTimelineInitialized = true,
+            hasMoreToLoadBackward = true,
+            hasMoreToLoadForward = false,
+        )
+        assertThat(result).containsExactly(
+            MatrixTimelineItem.Virtual(
+                uniqueId = UniqueId("BackwardLoadingIndicator"),
+                virtual = VirtualTimelineItem.LoadingIndicator(
+                    direction = Timeline.PaginationDirection.BACKWARDS,
+                    timestamp = clock.epochMillis()
+                )
+            ),
+            messageEvent,
+            messageEvent2,
+        )
+    }
+
+    @Test
+    fun `LoadingIndicatorsPostProcessor adds Loading indicator at the bottom of the list if hasMoreToLoadForward is true`() {
+        val clock = FakeSystemClock()
+        val sut = LoadingIndicatorsPostProcessor(clock)
+        val result = sut.process(
+            items = listOf(messageEvent, messageEvent2),
+            isTimelineInitialized = true,
+            hasMoreToLoadBackward = false,
+            hasMoreToLoadForward = true,
+        )
+        assertThat(result).containsExactly(
+            messageEvent,
+            messageEvent2,
+            MatrixTimelineItem.Virtual(
+                uniqueId = UniqueId("ForwardLoadingIndicator"),
+                virtual = VirtualTimelineItem.LoadingIndicator(
+                    direction = Timeline.PaginationDirection.FORWARDS,
+                    timestamp = clock.epochMillis()
+                )
+            ),
+        )
+    }
+
+    @Test
+    fun `LoadingIndicatorsPostProcessor adds Loading indicator at the bottom and at the top of the list`() {
+        val clock = FakeSystemClock()
+        val sut = LoadingIndicatorsPostProcessor(clock)
+        val result = sut.process(
+            items = listOf(messageEvent, messageEvent2),
+            isTimelineInitialized = true,
+            hasMoreToLoadBackward = true,
+            hasMoreToLoadForward = true,
+        )
+        assertThat(result).containsExactly(
+            MatrixTimelineItem.Virtual(
+                uniqueId = UniqueId("BackwardLoadingIndicator"),
+                virtual = VirtualTimelineItem.LoadingIndicator(
+                    direction = Timeline.PaginationDirection.BACKWARDS,
+                    timestamp = clock.epochMillis()
+                )
+            ),
+            messageEvent,
+            messageEvent2,
+            MatrixTimelineItem.Virtual(
+                uniqueId = UniqueId("ForwardLoadingIndicator"),
+                virtual = VirtualTimelineItem.LoadingIndicator(
+                    direction = Timeline.PaginationDirection.FORWARDS,
+                    timestamp = clock.epochMillis()
+                )
+            ),
+        )
+    }
+
+    @Test
+    fun `LoadingIndicatorsPostProcessor only adds 1 Loading indicator if there is no items in the list`() {
+        val clock = FakeSystemClock()
+        val sut = LoadingIndicatorsPostProcessor(clock)
+        val result = sut.process(
+            items = listOf(),
+            isTimelineInitialized = true,
+            hasMoreToLoadBackward = true,
+            hasMoreToLoadForward = true,
+        )
+        assertThat(result).containsExactly(
+            MatrixTimelineItem.Virtual(
+                uniqueId = UniqueId("BackwardLoadingIndicator"),
+                virtual = VirtualTimelineItem.LoadingIndicator(
+                    direction = Timeline.PaginationDirection.BACKWARDS,
+                    timestamp = clock.epochMillis()
+                )
+            ),
+        )
+    }
+}