TSI DZ Trading Guide

The TSI Dynamic Zones (Div) is an advanced momentum oscillator that combines the True Strength Index (TSI) with dynamic overbought and oversold zones, volatility histogram backgrounds, and automatic divergence detection.

What does the indicator show?

• TSI Line: The main smoothed momentum oscillator line.
• Signal Line: A Weighted Moving Average (WMA) baseline of the TSI for crossover signals.
• Dynamic Zones: Faint shaded areas at the top and bottom of the oscillator representing dynamic thresholds adjusted automatically based on historical probabilities.
• Volatility Histogram: Background colored bars that change color depending on Ichimoku-based (Kumo) market volatility ranging from low (grey) to extreme (dark red).
• Divergences: Automatic printing of Bull and Bear divergence lines connecting pivotal points.

Key Settings

• TSI Long / Short Length: Controls the lookback periods for the double-smoothed price momentum calculation.
• Lookback Bars (DZ): The number of previous bars analyzed to calculate the adaptive probabilities for the dynamic zones.
• Start Buy / Sell Probability: Baseline target probabilities used to define when the dynamic thresholds trigger.
• Show Divergences: Enables or disables visual display of divergence lines.

How to use Strategy Parameters (Condition Source)

Within the Strategy Tester module, you can leverage the data from this indicator to create powerful logical conditions for trade entries and exits.

1. TSI and Signal Metrics

• TSI — The True Strength Index value (-100 to 100).
• Signal — The smoothed baseline value.
• TSI Delta — Measures how fast the TSI is gaining or losing momentum (TSI - TSI Prev).

Strategy Example: For a trend-continuation entry, require TSI > 0 and TSI crosses_above Signal.

2. Dynamic Zones and Volatility

• Buy Zone — The exact value of the dynamic lower boundary threshold.
• Sell Zone — The exact value of the dynamic upper boundary threshold.
• Vol (Norm) — The normalized volatility reading (0 to 100+).

Strategy Example: Only trade reversals when the oscillator dips deep into the lower boundary using the condition: TSI < Buy Zone.

3. Divergence Trading

• Bullish Divergence — Triggers when a bullish divergence is detected.
• Bearish Divergence — Triggers when a bearish divergence is detected.

Strategy Example: Take profit on short positions when Bullish Divergence is_true.