William Blau True Strength Index with Three-Stage EMA Smoothing

Summary

The William Blau True Strength Index (TSI) is a momentum indicator that compares smoothed price momentum with smoothed absolute momentum. The described calculation first measures the change in applied price over a selected period. It then applies three successive exponential moving average (EMA) smoothing stages to both the signed change and its absolute value, and scales their ratio by 100. This normalization makes the result reflect the direction and relative strength of momentum.

Inputs include the price series, momentum period, three smoothing periods, and upper and lower reference levels for overbought and oversold readings. The description specifies the formula and parameter roles, but supplies no signal interpretation rules, market examples, or empirical performance results. It also does not establish universally suitable parameter values or thresholds. The indicator is presented as a calculation method, so users would need further testing to decide how it fits into a trading system.

Key ideas

• The TSI divides smoothed signed momentum by smoothed absolute momentum and multiplies the ratio by 100.
• Momentum is measured as the applied price minus its value at the start of the selected period.
• Both momentum series pass through three successive exponential smoothing stages.
• The indicator has configurable momentum, smoothing, and overbought and oversold level inputs.
• The description provides no tested trading rules or evidence of predictive performance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.