True Strength Index (TSI) is a technical indicator used in the financial market analysis. It uses moving averages of the main momentum of a financial instrument. The TSI indicator is based on the double smoothing of price changes. The true strength indicator fluctuates between positive and negative values, and the centerline of the indicator identifies the total offset. The Momentum is considered a leading indicator of price action, while the Moving Average follows the price. The TSI indicator combines these characteristics to indicate the price and direction which are more in sync with the market movements than a single momentum or moving average. It tries to show the trend direction, is useful for identifying oversold and overbought conditions in the market and warns of a weakening trend through divergence.
The indicator is calculated by the following formula:
The indicator view in the chart.
The indicator has the following parameters:
Exponential moving average period 1 - set the smoothing of the first-order values.
Exponential moving average period 2 - set the smoothing of the second-order values.
Smooth - set the smoothing period of the indicator values.
Panel - selection of the indicator location in the chart:
- New panel
Show value - display of the indicator value on the price scale.
Show zero values - display of zero values.
Scale/Auto-scaling - if this option is on, the scale will be automatically calculated, based on the minimum and maximum indicator values, so that the indicator would fit in the chart.
Visual type - visual setting of the indicator display in the chart:
- Up arrow
- Down arrow
- Axis label
Line style - setting of the line display style:
- Dash - dot
- Dash - dot - dot
Width - setting of the indicator line width.
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