TSI Divergence Indicator for MetaTrader5 Download - Free - [TF Lab]

The TSI Divergence indicator is one of the oscillators in MetaTrader 5 that detects divergences at peaks and troughs without requiring manual chart examination. This oscillator consists of a curve that identifies bullish divergences with a blue line when it is below the zero line and displays a buy signal on the chart. Conversely, when the curve is above the zero line, it detects bearish divergences with a pink line and shows a sell signal on the chart. This automated approach helps traders recognize potential trend reversals more efficiently.

Indicator Table

In the image below, the price chart of gold with the symbol [XAUUSD] in a 5-minute timeframe is displayed. Initially, there is a downtrend on the left side of the chart, at the end of which, a bullish (positive) divergence occurs, indicating a weakening of the downtrend. The indicator marks a buy signal on the price chart. On the right side of the image, at the end of an uptrend, a bearish (negative) divergence occurs, which the indicator highlights with a pink line, and a sell signal appears on the chart. Reliable signals from the indicator can be obtained using other tools and analytical styles.

Overview

The TSI (True Strength Index) oscillator is a valuable tool for detecting divergences on the price chart. This indicator identifies potential trend reversal points by recognizing divergences without requiring manual chart analysis and time-consuming scrutiny. Additionally, to facilitate better usage for traders, it marks the relevant points with buy and sell signals directly on the price chart. This feature enhances its utility in timely decision-making in trading scenarios.

Uptrend Signals (Buy Signals)

In the image below, the price chart of Lite coin with the symbol (LITECOIN) is displayed in a 15-minute timeframe. At the end of a downtrend, the indicator indicates a positive divergence (RD+) between two lows. The curve is blue and positioned below the zero level, signaling a potential reversal of the downtrend and issuing a buy signal. Traders can consider entering buy trades, especially when confirmed by other factors such as support levels.

Downtrend Signals (Sell Signals)

In the image below, the chart for the currency pair Canadian Dollar to Swiss Franc with the symbol (CADCHF) is displayed on a 4-hour timeframe. At the end of an uptrend, a negative divergence (RD-) between two highs is indicated by the indicator. The curve is orange and positioned above the zero level. This situation signals a potential reversal of the uptrend and issues a sell signal. Traders can consider entering sell trades, particularly when this signal is confirmed by other trading indicators such as resistance levels.

Settings of the TSI Divergence Indicator

• True Strength Index Momentum Smoothing Period: Use a 25-period moving average to smooth the True Strength Index
• True Strength Index Smoothing Period 2: Use a 13-period moving average for additional smoothing
• Price: Base calculations on the Close Price
• Number of Candles for Pivots Calculation: Set the number of candles used to calculate pivots at 8
• Maximum Distance Between Two Pivots: The maximum distance between two pivots is 30
• Minimum Distance Between Two Pivots: The minimum distance between two pivots is 5
• Number of Divergences from Pivot: There is one divergence counted per pivot
• Number of TSI that Break the Line: The TSI line break is identified as number 2
• Shift: The shift is set to 2
• Sell Divergence: The color for selling divergence signals is pink or any other color you choose
• Buy Divergence: The color for buying divergence signals is blue or any other color you choose
• Width: The width is set to 2

Summary

Like other divergence detection tools, the TSI oscillator is very useful for predicting trend directions promptly. This oscillator can be utilized across all time frames and various financial markets. Still, it is recommended to avoid using it in lower time frames and scalping styles for better performance. Additionally, it can be combined with various analytical tools alongside the TSI divergence for enhanced analysis. This integration helps confirm signals and make more informed trading decisions.