True Strength Index Commodity Trading Technical Analysis & TSI Trading Signals

True Commodity Trading Trend 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 commodity price changes, making it a leading indicator that follows commodity price action direction closely in the commodities trading market.

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

TSI also plots a histogram which shows the difference between the TSI Line & the Signal-line. This histogram crosses above the 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 cross-over signal.

Commodities Trading Analysis & Generating Trading Signals

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

Zero line Commodities Trading Crossover ( Histogram Commodities Trading crossover not Lines Commodity Trading crossover)

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

Commodity Trading Signal line Commodities Trading Crossover

• A buy is generated when TSI line crosses above Signal Line
• A sell is generated when 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 cross-overs happen.

Divergence Commodity Trading

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

Classic Commodities Trading Divergence

Commodity Trading Classic Bullish Divergence: Lower lows in commodity price and higher lows on the indicator

Commodity Trading Classic Bearish Divergence: Higher highs in commodity price and lower highs on the indicator

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

Hidden Commodities Trading Divergence Setup

Commodity Trading Hidden Bullish Divergence: higher lows in commodity price and lower lows on the indicator

Commodity Trading Hidden Bearish Divergence: lower highs in commodity price and higher highs on the indicator

Overbought/Oversold Levels on Indicator

This can be used to identify overbought & oversold conditions in commodity 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 TSI crosses these levels.

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

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

Oversold

Overbought

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