The True Strength Index (TSI) is a measure used in financial market technical analysis to determine the strength of a trend. I am going to explain what this index is for to my students.
The TSI is calculated using the mathematical formula that involves the difference between two exponential moving averages (EMA) and its relationship to the average true range (ATR). The result is a value that oscillates around zero and is represented in the form of a graph.
The TSI is used to identify significant changes in the direction of a trend. When the index is above zero, it indicates that the trend is bullish and when it is below zero, it indicates that the trend is bearish. Furthermore, the higher the absolute value of the TSI, the stronger the trend.
This index is useful for traders and investors as it helps them determine the direction and strength of a trend in the financial market. It allows them to make informed decisions about buying or selling assets, as well as helping them identify possible entry and exit points.
In summary, the true strength index (TSI) is a technical tool used to measure the strength of a trend in the financial market. It helps traders and investors make informed decisions and identify opportunities to buy or sell assets.
