True Strength Index Indicator MT4 | MT5

The Trend Strength Index is classified as an oscillator, developed by William Blau, designed to filter out market noise and provide a clearer view of trend strength and reversals. It is calculated using the double-smoothed EMA of price changes, making it more responsive to trend shifts while reducing lag.

• TSI (t.0, r, s) = 100 * EMA[EMA(m,r),s] / EMA[EMA(|m|,r),s]

Where;

• t.0: Today's closing price
• m: The difference between today's and yesterday's closing price (t.0 - t.1)
• r: EMA smoothing 25-period
• s: EMA smoothing 13-period

Otherwise, the TSI displays as a line divided into two colors: When the line turns blue, indicates a bullish movement, conversely, when it is colored orange, it signals a bearish movement. The indicator's line oscillates around a zero line, with key levels 25 and -25, providing traders with overbought and oversold signals and trend direction as well.

1. Trend direction:                                                                                                                                                                                                         - Bullish trend: If the TSI turns blue and stays above the zero line, signaling upward momentum. 

    - Bearish Trend: If the TSI is colored orange and remains below the balance level, indicating downward momentum.

2. Divergence Trading:                                                                                                                                                                                                  - Bullish divergence: Price makes lower lows, but TSI forms higher lows, signaling a potential bullish reversal.

   - Bearish divergence: Price makes higher highs, while TSI forms lower highs, indicating a potential bearish reversal.

3. Overbought and Oversold conditions:                                                                                                                                                                        - When the indicator's line crosses above the 25 level, indicating an overbought condition and a potential bearish reversal.

   - When the indicator's line drops below the -25 level, signaling an oversold condition and a potential bullish reversal.

1* In the first trading image, as shown on the MetaTrader 4 chart, the indicator is colored orange and then crossed below the zero line, confirming the continuation of the downtrend. When the tsi drops below the -25 value reaching the oversold zone, with the appearance of a bullish divergence as well, both suggest a potential upward reversal.

Furthermore, when the indicator turns blue and then rises above the balance level, confirming the beginning of the upward trend and signals a strong buying opportunity.

2* In the second trading image, as presented on the MetaTrader 4 chart, the indicator is colored blue and then rose above the balance line, indicating the continuation of the uptrend. When the tsi breaks above the 25 value reaching the overbought zone, with the appearance of a bearish divergence on the other hand, both signal a potential downward reversal.

Furthermore, when the indicator turns orange and then falls below the zero level, confirming the beginning of the downward trend and signals a strong selling opportunity.