True Strength Index (TSI)%

How it works

The TSI Percentuale calculates momentum by using double exponential smoothing of price changes and their absolute values. It first computes a raw TSI by dividing the double-smoothed price changes by the double-smoothed absolute price changes, then multiplies by 100.

The indicator then normalizes this raw TSI value over a specified lookback period by finding the minimum and maximum TSI values. This rescaling transforms the traditional TSI scale into a percentage from 0% to 100%, where 50% represents neutral momentum and the extremes indicate strong directional movement.

Why it may be useful

Traditional TSI can be difficult to interpret due to its wide ranging scale between -100 and +100. By converting the indicator to a percentage, traders can more easily understand and compare momentum strength across different time periods and financial instruments.

The percentile approach provides clear visual zones for momentum interpretation, such as above 70% indicating strong bullish momentum and below 30% signaling strong bearish momentum. This makes the indicator more accessible and actionable for traders of all experience levels.

When to explore it

The TSI Percentuale works best in trending markets where momentum is a key factor in price movement. It is particularly useful for identifying potential trend reversals and confirming the strength of existing trends across various timeframes.

Traders can leverage this indicator in multiple trading styles, from short-term scalping to longer-term swing trading. It is especially valuable when combined with other technical analysis tools to validate signals and provide a more comprehensive view of market momentum.

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