The True Strength index is a form of technical momentum indicator, similar to the Relative Strength Index that can help traders to identify when conditions of a particular security or currency have been either overbought or oversold.
The True Strength Index is usually gained by incorporating the short terms purchasing momentum within the current market at that particular time with the known lagging benefits of the moving averages. Usually an EMA, preferably of twenty five days duration is then applied the difference occurring between the two prices, with a thirteen day EMA then applied to this result. The aim of this being to make the True Strength Index indicator more sensitive to any prevailing conditions in the market, before the data is smoothed.
The True Strength Index is designed to an accurate indicator, with no or very little time lag and it is generally considered that an increase in the value shown by the True Strength Index also indicates an increase in the overall momentum of the direction of the price movement shown.« Back to Glossary Index