Plymouth Breeze with Temp Gauge lighting?

Ok, I know there are smart-as==e==, but I really need help, I'm down to no money, just got a job after over a year, my 1989 Plymouth Breeze (that has never been a prob) the temp light comes on, but it's not consistent, I drive to work which is about 15 miles, the car has a gauge has a arrow and a light, the gauge rises as driving then, when I get about 15 miles, the temp light right next to it will light. but... when you lift the hood, the engine doesn't seem to be hot, the fluid level of the water is good as is the antifreeze level, the engine doesn't even seem hot, but the gauge is reading hot, and the light will go on, then you drive half a block so you can pull off and the level of the gauge goes down, what do you think, obviously something is wrong with the car, could it be the engine, or thermostat, I had a guy help me as I was along the road, he could understand, the fluid was moving, the car didn't appear overheating, but that gauge keeps moving upward and driving me crazy. Could it be simple or major problem and what tests should be done?