True Strength Index Metals Analysis & TSI Trading Signals

True Metal 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 metals price changes, making it a leading indicator that follows metals price action direction closely in the metals 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 2 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 or below the center lines, histogram levels above the center line shows a bullish cross-over signal, while center line levels below the center-line shows a bearish cross-over signal.

Metal Analysis and How to Generate Trading Signals

The TSI uses various methods to generate trading signals. This metals indicator can be used in the same way as the RSI to determine general metals 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 Metal Trading Crossover (Histogram Metal Trading crossover not Lines Metals Trading crossover )

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

Metals Trading Signal line Metal Trading Crossover

• A buy is generated when TSI line crosses above the Signal Line
• A sell is generated when TSI line crosses below the Signal-line

This signal is the same as the one above & the timing corresponds to the time when the histogram cross-overs happen.

Divergence Metals Trading

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

Classic Metals Trading Divergence

Metals Classic Bullish Divergence: Lower lows in metals price and higher lows on the indicator

Metals Classic Bearish Divergence: Higher highs in metals price and lower highs on the indicator

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

Hidden Metal Trading Divergence Setup

Metals Trading Hidden Bullish Divergence: higher lows in metals price and lower lows on the indicator

Metals Trading Hidden Bearish Divergence: lower highs in metals price and higher highs on the indicator

Overbought/Oversold Levels on Technical Indicator

This can be used to identify overbought and over-sold conditions in metals 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 metals signal - when the areas cross above -25 level a buy is generated.

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

Oversold - Buy Trading Signal

Overbought - Sell Trading Signal

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