Tirone Levels

Tirone levels represent a sequence of several horizontal levels decreasing in succession. Tirone levels method is used to find support and resistance levels within trading range at a given moment of time.

Tirone levels were elaborated by John Tirone. In practice, TL are applied to improve visual reception of price movement. Also through these method of technical analysis one can generate open signals. For example, if price reaches TL from upward – it is an alert for purchase and a signal for sale is received, when prices approaches from bottom.

There are two options to measure Tirone levels.

One of methods is the Midpoint method and another one is the Mean method. Both of them are considered below.

Midpoint method

High and Low  are defined through the example.

To define upper line of TL, the formula is used:

Tirone Level 1 = Hhigh I – (Hhigh-Llow)/3

where Hhigh - Highest High — High price for a definite period;

Llow - Lowest Low — Low price for a definite period;

Low is deducted from High, then obtained value is divided into three and this value shall be deducted from High.

To find central line, following formula is applied:

Tirone Level 2 = Llow + (Hhigh-Llow)/2

Low is deducted from High, then obtained value is divided into two and Low is added to obtained value.

To find bottom line, the following formula is applied:

Tirone Level 3 = Llow + (Hhigh-Llow)/3

Low is deducted from High, then result is divided into two and Low is added.

Mean method

Five lines are put on chart. Firstly Adjusted Mean is found.

Adjusted mean = (Hhigh+Llow+Close)/3

where Close — is the price of close of candle.

To find upper line:

Tirone Level 1 = Adjusted Mean + (Hhigh-Llow)

Second line

Tirone Level 2 = 2 x Adjusted Mean - Llow

Third line or Adjusted Mean

Tirone Level 3 = Adjusted mean

Fourth line

Tirone Level 4 = 2 x Adjusted Mean - Hhigh

Bottom line

Tirone Level 5 = Adjusted Mean - (Hhigh-Llow)

Application of Tirone levels

Tirone levels are the set of certain support and resistance level based on trade range of asset (currency, CFD etc.) for a certain period of time. More often, they are used for a comfortable reception of price movement on market.

Application of TL is similar to application of Fibonacci retracement – opening of long position as price approaches TL from top and opening of short position as price approaches TL from bottom.

TL method has its supporters, however, the most part of intraday traders find TL not enough precise.