TSI MACD

The TSI MACD indicator combines the mechanics of the True Strength Index (TSI) and the Moving Average Convergence Divergence (MACD) to provide a comprehensive view of market momentum and trend strength. By applying the double-smoothing process of the TSI to the MACD line, the indicator filters out noise while highlighting significant shifts in price velocity.

Usage

The TSI MACD is primarily used as an oscillator to identify trend direction and potential reversal points. Traders can interpret the indicator through several methods:

• Zero Line Crosses: When the TSI MACD line crosses above zero, it indicates a bullish market bias. Conversely, a cross below zero suggests a bearish bias.
• Signal Line Crossovers: Bullish momentum is often signaled when the main line crosses above the signal line. A cross below the signal line indicates bearish momentum.
• Trend Strength: Higher values (approaching +100) or lower values (approaching -100) indicate strong directional momentum, while moves back toward the zero line suggest a weakening trend.

Details

The indicator's construction begins by calculating a standard MACD line (the difference between two EMAs). It then calculates the momentum of this MACD line (change from one bar to the next). This momentum value is then subjected to a double-smoothing process using exponential moving averages, similar to the standard TSI calculation. The result is a ratio multiplied by 100, creating an oscillator that typically moves between -100 and +100.

Settings

• Fast Length: The period for the shorter EMA used in the initial MACD calculation.
• Slow Length: The period for the longer EMA used in the initial MACD calculation.
• First R: The length of the first EMA used in the double-smoothing process.
• Second S: The length of the second EMA used in the double-smoothing process.
• Source: The price data used for calculations (default is Close).
• Signal Smoothing: The period used to calculate the signal line.
• Simple MA (Signal Line): When enabled, uses a Simple Moving Average for the signal line instead of an Exponential Moving Average.

FAQ

How do I use the TSI MACD for trade entries?

Traders often look for signal line crossovers that occur far from the zero line or wait for the TSI MACD line to cross the zero level to confirm a new trend direction.

What is the difference between this and a standard MACD?

While a standard MACD measures the distance between two averages, the TSI MACD measures the double-smoothed rate of change of that distance, resulting in a cleaner oscillator that is more sensitive to momentum shifts.

How can I access the TSI MACD?

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