True Strength Indicator + Realtime Divergences

The True Strength Indicator + Realtime Divergences tool is a momentum-based oscillator designed to identify trend strength, potential reversals, and trend continuations using advanced divergence detection and signal processing.

Usage

This script enhances the standard True Strength Index (TSI) by automating the identification of market momentum shifts. Traders can use the oscillator to spot overbought or oversold conditions, while the integrated divergence detection identifies discrepancies between price and momentum in real-time.

Key usage scenarios include:

• Trend Reversals: Look for Regular Bullish or Bearish divergences where price makes a new extreme but the TSI fails to follow, indicating a weakening trend.
• Trend Continuation: Use Hidden divergences to identify potential entries in the direction of the prevailing trend.
• Signal Crosses: Observe the interaction between the TSI line and its signal line. Crossovers can be highlighted with background colors or dots to time entries and exits.
• Multi-Timeframe Analysis: Use the alternate timeframe feature to view higher-timeframe momentum dynamics directly on your current chart.

Details

The indicator is based on the William Blau True Strength Index, which uses double-smoothed exponential moving averages of price changes to calculate momentum. This specific implementation includes:

• Real-time Divergences: Algorithms scan for pivots and calculate slopes to draw divergence lines automatically.
• Heikin Ashi Mode: An optional toggle to calculate the TSI based on Heikin Ashi values, providing a smoother output for trend followers.
• Visual Enhancements: Includes "Fade out" options for historical dots and the oscillator to keep the chart clean and focused on recent price action.

Settings

TSI settings

• Long Length: The length of the first EMA smoothing for the price change.
• Short Length: The length of the second EMA smoothing.
• Signal Length: The length of the EMA applied to the TSI to create the signal line.

Divergence settings

• Show Divergence Lines: Toggles the visibility of divergence lines on the oscillator.
• Show Only Last Divergence: When enabled, only the most recent detected divergence is shown.
• Don't Wait for Confirmation: Allows for more aggressive divergence detection before the pivot is fully confirmed.
• Divergence Type: Choose between Regular, Hidden, or both.

Pivot point settings

• Pivot period: Sets the lookback used to identify swing highs and lows.
• Maximum Pivot periods to check: Determines how many historical pivots are scanned for potential divergences.

FAQ

How do I interpret the different divergence lines? Solid lines typically represent Regular divergences (potential reversals), while dotted lines represent Hidden divergences (potential trend continuations). These can be customized in the Style settings.

What does the "Flip Oscillator" setting do? This flips the oscillator vertically. It is intended for use with TradingView’s "Invert Scale" (Alt+I) feature, ensuring the oscillator remains intuitive relative to the inverted price action.

How can I access this indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.