A momentum oscillator that double-smooths price change with EMAs and normalizes it by the double-smoothed absolute change. Smooth yet low-lag, read through the zero line, a signal line, and divergence.
The TSI (True Strength Index) is a momentum oscillator introduced by William Blau in 1991 in Technical Analysis of Stocks and Commodities.
The starting idea is simple. Measure the day-over-day price change, that is, momentum (the change itself).
But raw momentum is full of noise and unusable as is. So Blau applied an exponential moving average (EMA) to that change twice over, smoothing it out.
Here is where it gets interesting. Smoothed momentum tells you how hard the market is currently pushing, but the magnitude of that value varies wildly across instruments and regimes, with no fixed ceiling or floor.
Blau's trick was to divide this smoothed momentum by the same double-smoothing applied to the absolute value of the change. The numerator (directional force) is normalized by the denominator (the size of the force regardless of direction). This confines the value between −100 and +100, producing a smooth, low-lag oscillator that can be compared across instruments.
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