DEFINITION of 'True Strength Index  TSI'
A technical momentum indicator that helps traders determine overbought and oversold conditions of a security by incorporating the shortterm purchasing momentum of the market with the lagging benefits of moving averages. Generally a 25day exponential moving average (EMA) is applied to the difference between two share prices, and then a 13day EMA is applied to the result, making the indicator more sensitive to prevailing market conditions. After the data is smoothed, some calculations are done to make the indicator fall in a range from +100 to 100, or from +1 to 1.
BREAKING DOWN 'True Strength Index  TSI'
A signal line (7day EMA) is usually added  as it is to the moving average convergence divergence indicator  to help identify reversals. In addition, values of 25 and +25, like the levels of 30 and 70 used in the relative strength index, can also be used to identify levels where a security is overbought or oversold. The true strength indicator is a variation of the relative strength index.

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