Trade Stock Indices

Learn Stock Indices Trading

TSI Indices Technical Analysis and TSI Indices Trading Signals

Indices Trend Strength Indicator

Developed by William Blau


TSI is a momentum indicator. The TSI is drawn by using a momentum calculation that reacts faster and is more responsive to stock indexes price changes, making it a leading indicator that follows stock indexes price action direction closely in the stock indexes trading market.


The TSI is drawn as a blue line, the indicator also plots a signal line which is drawn as a red line, and these two lines are used to generate crossover signals.


TSI also plots a histogram which shows the difference between the TSI Line and the Signal line. This histogram crosses above or below the center lines, histogram levels above the center line shows a bullish crossover signal, while center line levels below the center line shows a bearish crossover signal.

TSI Technical Stock Indexes Indicator - Indices Trend Strength Indicator



Indices Technical Analysis and Generating Indices Trading Signals

The TSI uses various methods to generate stock indexes trading signals. This stock indices indicator can be used in the same way as the RSI to determine general indices trend direction of the stock indexes trading markets. Overbought and oversold levels can also be shown using TSI. The most common methods of generating trading signals are:


Zero line Crossover (Histogram crossover not Lines crossover)

  • Buy - when the histogram crosses above 0 a buy is generated

  • Sell - when the histogram crosses below 0 a sell is generated

TSI Technical Stock Indexes Indicator - Indices Trend Strength Indicator



Signal line Crossover

  • A buy is generated when the TSI line crosses above the Signal line

  • A sell is generated when the TSI line crosses below the Signal line

This signal is the same as the one above and the timing corresponds to the time when the histogram crossovers happen.



Divergence Indices Trading

Divergence is used to look for potential indices trend reversal point of indices. The reversal divergence setups are:


Classic Divergence

Indices Trading Classic Bullish Divergence: Lower lows in stock indexes price and higher lows on the indicator

Indices Trading Classic Bearish Divergence: Higher highs in stock indexes price and lower highs on the indicator


Divergence trading can also be used in identifying potential indices trend continuation points in stock indexes price action direction. The continuation divergence trading setups are:


Hidden Divergence

Indices Trading Hidden Bullish Divergence: higher lows in stock indexes price and lower lows on the indicator

Indices Trading Hidden Bearish Divergence: lower highs in stock indexes price and higher highs on the indicator



Overbought/Oversold Levels

This can be used to identify overbought and oversold conditions in stock indexes price action movements.

  • Overbought condition - levels being greater than the +25 level

  • Oversold condition - levels being less than the -25 level

Trades can be generated when the TSI crosses these levels.

Buy signal - when the levels cross above -25 level a buy is generated.

Sell signal - when the levels cross below +25 level a sell is generated.

Indices Trend Strength Indicator

Oversold - Buy Indices Trading Signal


Indices Trend Strength Indices Technical Indicator

Overbought - Sell Indices Trading Signal


The overbought/oversold levels are indicated using horizontal lines drawn at the +25 and -25 levels.

 

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