The True Strength Index (TSI) & CHF/JPY: The Secret Weapon You’re Not Using (Yet!)

Why Most Traders Get It Wrong (And How You Can Avoid It)

Let’s be real: most traders approach CHF/JPY like it’s just another currency pair, and they use indicators the same way people follow GPS directions blindly—without thinking. That’s where they mess up. But what if I told you there’s a hidden gem that pro traders quietly use to stay ahead? Enter the True Strength Index (TSI)—a lesser-known momentum indicator that could change the way you trade CHF/JPY forever.

What Is the True Strength Index (TSI)?

The TSI isn’t just another RSI or MACD clone. It’s an advanced momentum oscillator that eliminates noise and identifies trends with surgical precision. Developed by William Blau, it smooths out price fluctuations better than most oscillators by using a double-smoothed calculation. This means it’s ideal for spotting hidden trends and reversals—perfect for CHF/JPY, a pair notorious for its erratic movements.

Key Features of TSI:

• Measures true price momentum with minimal lag.
• Reduces noise and false signals better than RSI or Stochastic.
• Helps spot overbought/oversold levels with greater accuracy.
• Provides clear buy/sell signals via crossovers and divergences.

Why CHF/JPY & TSI Are a Perfect Match

CHF/JPY is a fascinating pair. It has the precision of a Swiss watch and the unpredictability of Tokyo rush hour traffic. The Swiss Franc (CHF) is a safe-haven currency, while the Japanese Yen (JPY) thrives on risk sentiment. This mix results in wild price swings, false breakouts, and frustrating trend reversals.

Why TSI Works for CHF/JPY:

1. Eliminates Market Noise: CHF/JPY’s sharp spikes and retracements make many indicators unreliable. TSI smooths these out.
2. Identifies Strong Momentum Moves: CHF/JPY moves fast, and TSI ensures you don’t chase fake breakouts.
3. Early Reversal Warnings: CHF/JPY often reverses out of nowhere, but TSI divergence can warn you before it happens.

The Forgotten Strategy That Outsmarted the Pros

Most traders focus on common indicators like RSI, but pros use TSI for better entry timing. Here’s how you can do the same.

Step-by-Step Guide to Trading CHF/JPY with TSI

1. Set Up TSI on Your Chart:
   • Use a 25/13 TSI setting (common for volatile pairs like CHF/JPY).
   • Add a 9-period signal line to identify crossovers.
2. Look for Buy & Sell Signals:
   • Buy Signal: When TSI crosses above the signal line from below -30 (oversold).
   • Sell Signal: When TSI crosses below the signal line from above +30 (overbought).
3. Confirm with Price Action:
   • Check for bullish reversal candles (e.g., engulfing patterns) for buys.
   • Look for bearish reversal candles at resistance for sells.
4. Use Divergence for Early Entries:
   • Bullish Divergence: Price makes a lower low, but TSI makes a higher low → Expect a reversal up.
   • Bearish Divergence: Price makes a higher high, but TSI makes a lower high → Prepare for a drop.
5. Ride the Trend:
   • TSI staying above zero = strong bullish trend.
   • TSI staying below zero = strong bearish trend.

Real-World Example: TSI in Action on CHF/JPY

Let’s break down an actual CHF/JPY trade from February 2024:

• TSI Divergence Found: CHF/JPY was dropping, but TSI showed a bullish divergence at 145.50.
• Entry Signal: TSI crossed above -30, confirming momentum shift.
• Price Reaction: The pair exploded to 148.00 within two days, a +250 pip move.
• Exit Strategy: TSI crossed back below the signal line, signaling a cool-off.

Common Mistakes When Using TSI (And How to Avoid Them)

1. Ignoring Higher Timeframes – CHF/JPY’s trend bias matters. Always check the daily chart before entering lower timeframes.
2. Overtrading Short Signals – TSI works best in strong momentum conditions. Avoid overtrading weak signals.
3. Forgetting Risk Management – Always place stop losses below/above key structure levels, not just based on TSI alone.

How to Master CHF/JPY with TSI (Faster Than Most Traders)

If you want to master the TSI strategy and dominate CHF/JPY, join our StarseedFX community where we break down these advanced techniques daily:

• Live Trading Insights & Analysis: Join the Community
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Image Credits: Cover image at the top is AI-generated