TSI: True Strength Index Explained

William Blau's True Strength Index (TSI) starts from the rawest possible input — the bar-to-bar price change — and double-smooths it (default 25 then 13 periods), normalized to a ±100 scale. The result keeps momentum's direction honest while stripping out its noise, and it tracks price turns with surprisingly little lag for how smooth it is.

How TSI Works

• Positive TSI: smoothed momentum is up; negative: down.
• Signal line (default 13-period EMA of TSI) gives crossover triggers.
• ±25 areas serve as practical overbought/oversold markers on most markets.

Double smoothing of momentum (not price) is the trick: turns in TSI stay close in time to turns in price, unlike a double-smoothed average.

How to Trade It

1. Signal-line cross. The workhorse: long when TSI crosses above its signal line while both are recovering from negative territory.

2. Zero cross. A slower, higher-conviction regime flip — momentum's center of gravity changed sides.

3. Divergence. TSI's smoothness makes divergences unusually easy to spot programmatically: higher price high + lower TSI high = fading trend.

Building It in Setup.Cash

Add TSI in the strategy builder with its long/short/signal periods and condition on crossings or levels. It plays the same role as MACD but is normalized, so thresholds transfer across symbols — handy when one strategy runs on many markets.

Tuning

• 25 / 13 / 13: Blau's classic.
• Faster (13/7): swing trading on intraday charts.
• Slower (40/20): position-level regime detection.

Related Reading

TSI belongs to the smoothed-momentum family with TRIX and the Ultimate Oscillator; the extended library adds SMI (Stochastic Momentum Index) and RSX (a smoother RSI). Backtest before going live — smooth indicators tempt you to overtrust them.