52 True Strength Index (TSI)

The true strength index (TSI) divides the price change (negative or positive) over the absolute value of change. Basically, of the given change in price in an stock, was it going up or down?. It can also be combined with a fast moving average of the TSI (i.e., signal), allowing to check for crossovers. Basically, if TSI moves above the signal TSI then price has bull momentum.

Figure 8.69: TSI

When TSI crosses above zero, it suggest bull trend, this can be used as a signal of trend continuation.

Figure 8.70: TSI crossing zero line