True Strength Index Bitcoin Analysis & TSI Trading Signals

TSI Indicator

Developed by William Blau

True Strength Index is a momentum indicator. The TSI is drawn by using a momentum calculation that reacts faster and is more responsive to bitcoin price changes, making it a leading indicator that follows bitcoin price action direction closely in the btcusd market.

The True Strength Index is drawn as a blue line, the indicator also plots a signal line which is drawn as a red line, and these two lines are used to generate crossover signals.

True Strength Index also plots a histogram which shows the difference between the TSI Line and the Signal line. This histogram crosses above or below the center lines, histogram levels above the center line shows a bullish crossover signal, while center line levels below the center line shows a bearish crossover signal.

BTCUSD Analysis & Generating Signals

The TSI uses various methods to generate cryptocurrency signals. This cryptocurrency indicator can be used in the same way as the RSI to determine general bitcoin trend direction of the markets. Overbought and oversold levels can also be shown using TSI. The most common methods of generating signals are:

Zero line BTCUSD Trading Cross-over ( Histogram BTCUSD Trading crossover not Lines Bitcoin crossover)

• Buy - when the histogram crosses above 0 a buy is generated
• Sell - when the histogram crosses below 0 a sell is generated

Bitcoin Signal line BTCUSD Trading Crossover

• A buy is generated when the TSI line crosses above Signal-line
• A sell is generated when the TSI line crosses below Signal Line

This signal is the same as the one above and the timing corresponds to the time when the histogram crossovers happen.

Divergence Bitcoin Trading

Divergence is used to look for potential bitcoin trend reversal point of bitcoin crypto. Reversal divergence setups are:

Classic BTCUSD Trading Divergence

Bitcoin Trade Classic Bullish Divergence: Lower lows in bitcoin price & higher lows on the indicator

Bitcoin Trade Classic Bearish Divergence: Higher highs in bitcoin price & lower highs on the indicator

Divergence trading can also be used in identifying potential bitcoin trend continuation points in bitcoin price action direction. Continuation divergence setups are:

Hidden Bitcoin Trade Divergence Setup

Bitcoin Hidden Bullish Divergence: higher lows in bitcoin price and lower lows on the indicator

Bitcoin Hidden Bearish Divergence: lower highs in bitcoin price and higher highs on the indicator

Overbought/Oversold Levels on Technical Indicator

This can be used to identify overbought & oversold conditions in bitcoin price action movements.

• Overbought condition - levels being greater than the +25 level
• Oversold condition - levels being less than the -25 level

Trades can be generated when TSI crosses these levels.

Buy signal - when the areas cross above -25 level a buy is generated.

Sell signal - when the areas cross below +25 level a sell is generated.

Oversold

Overbought

The overbought/oversold levels are indicated using horizontal lines drawn at the +25 and -25 levels.