The true strength index (TSI) is a technical indicator used in the analysis of financial markets that attempts to show both trend direction and overbought/oversold conditions. It was first published William Blau in 1991.[1][2] The indicator uses moving averages of the underlying momentum of a financial instrument.[3][4] Momentum is considered a leading indicator of price movements, and a moving average characteristically lags behind price. The TSI combines these characteristics to create an indication of price and direction more in sync with market turns than either momentum or moving average.[5] The TSI is provided as part of the standard collection of indicators offered by various trading platforms.
The true strength index (TSI) I introduce here is based on momentum as it occurs in nature, with no need to segregate up and down components of the momentum. ... The double-smoothed true strength index gives a choice to the trader; selection of the smaller smoothing time can be made to satisfy individual trading personalities. ... Calculating the true strength index requires an introduction to exponentially smoothed moving averages (EMA)