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Trend Strength Index

How straight the price has moved over the last bars, as the correlation of the close with time (−1 to +1): settings on MillionChart and an example on gold.

The Trend Strength Index measures how straight the price has moved over the last 14 bars: it is the correlation between the close and time, so it reads +1 for a steady rise, −1 for a steady fall and about 0 when there is no trend. It is drawn in its own pane with a fixed scale from −1 to +1. It is not the True Strength Index (TSI), a momentum oscillator with a similar name.

Trend Strength Index (14, close) under gold, daily candles
Trend Strength Index (14, close) under gold, daily candles

What it shows#

  • Trend strength — the gold line in its own pane, between −1 and +1.
  • Upper and Lower — dashed levels at +0.5 and −0.5; beyond them the trend is clear.
  • Zero — a dotted line in the middle; a cross of it changes the direction read.
  • Rising toward +1 means the closes line up ever more neatly in a rise; falling toward −1 the same in a fall; near zero the closes wander with no line through them. Shown with three decimals.

How it is calculated#

Take the last Length values of the Source (14 closes) and their positions 1 to 14; the index is the Pearson correlation of the two — how well a straight line through the closes explains them, with its sign giving the direction. The value is capped to ±1, needs at least 2 bars, and is empty while the window is flat.

How traders use it#

  • Above +0.5 the market is trending up steadily enough to follow; below −0.5 it is trending down; between the levels it is choppy, and range tools work better than trend tools.
  • A cross of zero is the earliest change of the reading; a cross of ±0.5 is the confirmation.
  • Divergence: the price makes a higher high while the index tops lower — the rise is becoming less straight, often before it ends.
  • Use it as a filter: take long signals from a faster tool only while the index is above zero, shorts only below.
  • Watch out: it measures how straight a move is, not how large. A slow drift of a few dollars a day can read +0.9 while a sharp but jagged rally reads 0.3. It also lags by its window: 14 bars of a new direction are needed for the value to swing fully.

Settings#

SettingDefaultWhat it changes
Length14Bars in the window (2 to 500). Longer measures a longer move and moves more slowly.
SourceCloseThe price measured: Close, Open, High, Low, Mid (HL2), Typical (HLC3) or Average (OHLC4).
Colours and style—Trend strength colours the line; Upper level, Zero line and Lower level colour the levels.

Example on gold#

For example, gold climbs from $4,200 to $4,330 over three weeks with only small down days; the index rises through +0.5 in the first week and holds near +0.85 after that. A trader treats the market as trending and buys pullbacks instead of selling the highs. In the fourth week gold makes a new high at $4,350, but with two sharp drops on the way the index tops at +0.6 — the rise is losing its shape, and the trader tightens the stop.

What invalidates the trend read: the index falling through zero. The last 14 closes no longer lean up, and the next move needs a fresh reading.

Add it to your chart#

  1. Click Indicators in the top strip (on the Pro screen, press I).
  2. Type trend strength and click Trend Strength Index.
  3. Click its chip in the legend (Trend Strength 14 close) to open the Inspector and change the settings; drag the chip to reorder; the dot hides it; × removes it.