True Strength Index (TSI)

True Strength Index (TSI) is a technical analysis momentum indicator which helps traders determine stock price overbought and oversold conditions by incorporating the short-term purchasing momentum of the market.

True Strength Index (TSI)

True Strength Index (TSI) is a technical analysis momentum indicator which helps traders determine stock price overbought and oversold conditions by incorporating the short-term purchasing momentum of the market with the lagging benefits of moving averages.

 


Application of True Strength Index

Generally a 25-day exponential moving average (EMA) is applied to the difference between two share prices, and then a 13-day EMA is applied to the result, making the indicator more sensitive to prevailing market conditions. After the data is smoothed, some calculations are done to make the indicator fall in a range from +100 to -100, or from +1 to -1.


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