Author: John Tirone
If you're looking to improve your trading strategy, the Five Tirone Levels might just be what you need. These levels consist of a series of horizontal lines that help identify potential support and resistance areas on your price charts.
Developed by John Tirone in his book, Classical Technical Analysis as a Powerful Trading Methodology, this approach uses the Adjusted Mean method to generate five non-symmetrical lines that can provide valuable insights into market movements.
Here's a quick rundown on how to calculate these levels:
- First, find the Adjusted Average Value (Adjusted Mean).
- The second line is determined by subtracting the minimum from the Adjusted Mean, then multiplying the result by 2.
- The third line is simply the Adjusted Mean itself.
- Next, calculate the fourth line by subtracting the maximum from the Adjusted Mean, multiplied by 2.
- Finally, the fifth line is determined by subtracting the difference between the maximum and minimum from the Adjusted Mean.
The calculations break down like this:
Adjusted mean = (Hhigh + Llow + Close) / 3
Tirone Level 1 = Adjusted Mean + (Hhigh - Llow)
Tirone Level 2 = 2 x Adjusted Mean - Llow
Tirone Level 3 = Adjusted Mean
Tirone Level 4 = 2 x Adjusted Mean - Hhigh
Tirone Level 5 = Adjusted Mean - (Hhigh - Llow)
Where:
- Hhigh (Highest High): The highest price over a specific period, such as 20 bars.
- Llow (Lowest Low): The lowest price over the same period.
- Close: The closing price of the current bar.
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