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True Strength Index Gold Trading Analysis and TSI Gold Trading Signals

True XAUUSD 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 xauusd price changes, making it a leading indicator that follows xauusd price action direction closely in the xauusd 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.

XAUUSD Trend Strength Indicator



XAUUSD Trading Analysis and Generating XAUUSD Trading Signals

The TSI uses various methods to generate xauusd trading signals. This gold indicator can be used in the same way as the RSI to determine general gold trend direction of the xauusd 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

XAUUSD 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.


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Divergence XAUUSD Trading

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


Classic Divergence

Gold Trading Classic Bullish Divergence: Lower lows in xauusd price and higher lows on the indicator

Gold Trading Classic Bearish Divergence: Higher highs in xauusd price and lower highs on the indicator


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


Hidden Divergence

Gold Trading Hidden Bullish Divergence: higher lows in xauusd price and lower lows on the indicator

Gold Trading Hidden Bearish Divergence: lower highs in xauusd price and higher highs on the indicator



Overbought/Oversold Levels

This can be used to identify overbought and oversold conditions in xauusd 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.

Buy XAUUSD Trading Signal - XAUUSD Trend Strength Indicator

Oversold - Buy Gold Trading Signal


XAUUSD Trend Strength XAUUSD Trading Indicator

Overbought - Sell Gold Trading Signal


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

 

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