True Strength Index with Buy/Sell Signals and Alerts
Sep 2, 2024
The True Strength Index with Buy/Sell Signals and Alerts indicator provides a momentum-based oscillator designed to help traders identify trend direction and potential market reversal points through double-smoothed price changes.
Usage
The True Strength Index (TSI) is primarily used to gauge the strength of a trend and identify overextended market conditions.
- Trend Identification: Values above the zero line suggest a prevailing bullish trend, while values below zero indicate a bearish trend.
- Crossover Signals: The tool generates "BUY" labels when the TSI line crosses above the signal line and "SELL" labels when it crosses below. These signals indicate shifts in momentum.
- Divergences: Users can look for discrepancies between price action and the TSI oscillator to anticipate potential trend exhaustion or reversals.
Details
The TSI calculation relies on a double-smoothing process. It first calculates the raw price change between bars, then applies two successive Exponential Moving Averages (EMAs) to that change. The result is divided by a double-smoothed absolute price change to normalize the values between -100 and +100. This process effectively filters out market noise while maintaining responsiveness to significant price movements. The signal line is a third EMA applied to the final TSI value to provide a smoother trigger for crossovers.
Settings
- Long Length: Sets the period for the first EMA smoothing of the price change.
- Short Length: Sets the period for the second EMA smoothing of the price change.
- Signal Length: Determines the period for the signal line EMA.
- Source: The price data used for calculations (default is Close).
FAQ
How do I use the TSI for trend confirmation?
You can look at the position of the TSI relative to the zero line. When the indicator remains consistently above zero, it confirms a strong uptrend; conversely, remaining below zero confirms a downtrend.
What do the Buy and Sell labels represent?
The labels appear when the TSI line crosses its signal line. A "BUY" appears on a bullish crossover, and a "SELL" appears on a bearish crossunder, signaling a potential shift in momentum.
How can I access this tool?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
Trading & investing are risky and many will lose money in connection with trading and investing activities. All content on this site is not intended to, and should not be, construed as financial advice. Decisions to buy, sell, hold or trade in securities, commodities and other investments involve risk and are best made based on the advice of qualified financial professionals. Past performance does not guarantee future results.
Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, including, but not limited to, lack of liquidity. Simulated trading programs in general are designed with the benefit of hindsight, and are based on historical information. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
As a provider of technical analysis tools and strategies, we do not have access to the personal trading accounts or brokerage statements of our customers. As a result, we have no reason to believe our customers perform better or worse than traders as a whole based on any content, tool, or platform feature we provide.
Charts used on this site are by TradingView in which the majority of our technical indicators are built on. TradingView® is a registered trademark of TradingView, Inc. www.TradingView.com TradingView® has no affiliation with the owner, developer, or provider of the Services described herein.
Market data is provided by CBOE, CME Group, BarChart, Massive, CoinAPI. Select U.S. equities data is provided through Massive. CBOE BZX real-time U.S. equities data is licensed from CBOE and provided through BarChart. Real-time futures data is licensed from CME Group and provided through BarChart. Select cryptocurrency data, including major coins, is provided through CoinAPI. All data is provided “as is” and should be verified independently for trading purposes.
This does not represent our full Disclaimer. Please read our full disclaimer.
© 2026 LuxAlgo Global, LLC.