The most reliable way to tell if you're shedding fat is by measuring your waistline. You can also monitor how your clothes fit and check if your strength is maintained in the gym. In addition, visual changes can be tracked by taking weekly progress photos in the same lighting and clothing.
Then there's the scale. The problem is that the scale can lie about your weight because it's only measuring your total body weight and not what that weight is made of. It simply can't distinguish between fat, muscle, and water. Every single day your body weight can fluctuate by a few pounds in either direction.
That said, the scale can show minor victories in your fat loss journey. I can clearly remember when I went from 240 pounds down to 230, then from 230 down to 220, 220 down to 210, and then 210 down to 200. Breaking the 200 barrier (entering "One-derland") came shortly after that.
Nowadays my scale weight fluctuates between 1990 and 1995. But this morning my scale had a number I hadn't seen since my 40s -- 189. To me that's a massive milestone that goes far beyond just seeing a new number on the scale. It's given me a profound psychological boost.
For this and easily a hundred thousand other things, I offer this prayer of gratitude to God.