True Strength Index (TSI)

Name Type Prerequisite Use Cases
True Strength Index (TSI) Momentum EMA Identifying trend direction and overbought/oversold levels.

Definition

The True Strength Index (TSI) is a momentum oscillator based on a double smoothing of price changes.

Mathematical Equation

\[\nTSI = 100 \times \frac{\text{EMA}(\text{EMA}(\text{Price Change}))}{\text{EMA}(\text{EMA}(|\text{Price Change}|))}\n\]

Special cases

  • Maximum possible value: 100
  • Minimum possible value: -100
  • Behavior: Oscillates between bounds, smoothing momentum to identify trend reversals.

Visualization

True Strength Index (TSI)

Trading Significance

  • Category: Momentum

  • Use Case: Identifies overbought/oversold conditions and trend direction.