TSI + Divergences

The TSI + Divergences indicator combines the momentum-tracking capabilities of the True Strength Index with automated divergence detection to help traders identify potential trend reversals and continuations.

Usage

The tool can be used to identify market momentum and trend exhaustion through several methods:

• Momentum Bias: When the TSI is above the zero line, the market bias is generally bullish; below zero indicates a bearish bias.
• Signal Line Crossovers: Crossovers between the main TSI line and the signal line can indicate short-term shifts in momentum.
• Regular Divergences: Occur when the price makes a higher high but the TSI makes a lower high (Bearish), or price makes a lower low while the TSI makes a higher low (Bullish). These suggest potential trend reversals.
• Hidden Divergences: Occur when the price makes a higher low but the TSI makes a lower low (Bullish), or price makes a lower high while the TSI makes a higher high (Bearish). These typically suggest trend continuation.

Details

The True Strength Index (TSI) is a double-smoothed momentum oscillator developed by William Blau. Unlike a standard RSI or MACD, the double-smoothing process (using EMAs) aims to reduce noise and provide a cleaner representation of price momentum. This specific implementation enhances the core calculation by overlaying a pivot-based detection system that identifies both regular and hidden divergences automatically.

Settings

TSI Parameters

• Long Length: The length of the first EMA used in the double-smoothing process.
• Short Length: The length of the second EMA used in the double-smoothing process.
• Signal Length: The EMA period applied to the TSI to create the signal line.
• TSI Cloud: Toggles the visual cloud between the TSI and signal lines.

Divergence Parameters

• Pivot Lookback Right/Left: Sets the number of bars required on either side of a high or low to confirm a pivot point.
• Max/Min Lookback Range: Defines the distance between two pivots to be considered for a divergence.
• Plotting Toggles: Allows users to enable or disable the visualization of Regular Bullish, Hidden Bullish, Regular Bearish, and Hidden Bearish divergences individually.

FAQ

How do I use the divergence alerts?

You can configure alerts within TradingView to trigger whenever a specific divergence type (Bullish, Bearish, Hidden Bullish, Hidden Bearish) is detected, ensuring you are notified without needing to monitor the chart constantly.

How can I adjust the sensitivity of the detections?

By modifying the "Pivot Lookback" and "Lookback Range" settings, you can tune the indicator to detect more frequent short-term divergences or fewer, more significant long-term divergences.

How do I access TSI + Divergences?

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