Tsi Yahoo Finance

The TSI (True Strength Index) on Yahoo Finance is a momentum oscillator used in technical analysis to identify potential overbought and oversold conditions in a security's price. It attempts to overcome some of the limitations of simpler oscillators like the Relative Strength Index (RSI) by considering both price direction and strength of momentum.

Unlike the RSI, which focuses solely on price changes, the TSI incorporates double smoothing of price momentum. This double smoothing process aims to reduce noise and create a more reliable signal. It's calculated using exponential moving averages (EMAs) of both price changes and the absolute value of price changes. The specific formula is complex but essentially involves two stages of smoothing applied to the percentage price change. This double smoothing is intended to filter out short-term fluctuations and highlight the underlying trend more effectively.

On Yahoo Finance, you can typically find the TSI indicator listed under "Technicals" when viewing a specific stock's quote. The TSI is generally displayed as a single line oscillating between -100 and +100. Interpretations often center around these levels:

• Overbought: Readings above +25 (or sometimes +20) may suggest the asset is overbought and a price correction could be imminent.
• Oversold: Readings below -25 (or sometimes -20) may indicate the asset is oversold and a price rebound is possible.
• Centerline Crossover: Crossing above the centerline (0) can be interpreted as a bullish signal, suggesting positive momentum is increasing. Conversely, crossing below the centerline can be seen as a bearish signal.
• Divergence: When the price action diverges from the TSI reading, it can be a powerful signal. For example, if the price makes a new high but the TSI fails to make a new high (bearish divergence), it could indicate weakening momentum and a potential reversal. The opposite is true for bullish divergence.

It's crucial to remember that the TSI, like all technical indicators, should not be used in isolation. It's most effective when combined with other forms of analysis, such as price action analysis, trendlines, and volume indicators. Consider the overall market context and the specific characteristics of the asset being analyzed. For example, volatile stocks might require different overbought/oversold thresholds than less volatile ones.

Yahoo Finance provides the TSI as a readily available tool for investors to quickly assess momentum. However, understanding the underlying calculations and limitations of the indicator is crucial for making informed trading decisions. Experiment with different settings (e.g., the period lengths used in the EMA calculations) to find what works best for your trading style and the specific market you're analyzing. Always backtest your strategies and exercise caution when interpreting signals from any technical indicator.