Tirone Levels
(developed by John Tirone, surprisingly enough!) are a set of proprietary
support and resistance levels based on the range of a stock's prices
over a given time period which makes their interpretation similar
to Quadrant Lines. As a support and reistance strategy, Tirone Levels
have their admirers, although most day traders do not believe them
to be as accurate as SureFireThing Camarilla Equation Levels.
There are 2 ways to calculate
Tirone Levels, the first is known as the Midpoint Method. Find the
highest high and the lowest low during the time period under consideration.
To generate the top line ,subtract the lowest low from the highest
high, divide this value by three, and then subtract this result
from the highest high. To generate the center Line, subtract the
lowest low from the highest high, divide this value by two, and
then add this result to the lowest low. The bottom Line is generated
by subtracting the lowest low from the highest high, dividing this
value by three, and then adding this result to the lowest low.
Th other method is known as the mean method, which gives you 5 lines
(often spaced asymetrically). To generate the extreme high, subtract
the lowest low from the highest high and add this value to the Adjusted
Mean. The 'regular high requires you to subtract the lowest low
from the value of the Adjusted Mean multiplied by two. To generate
the adjusted mean, sum the highest high, the lowest low, and the
most recent closing price, then divide by three. The regular low
is calculated by subtracting the highest high from the value of
the Adjusted Mean multiplied by two, while the extreme Low requires
you to subtract the lowest low from the highest high and then subtract
this value from the Adjusted Mean.
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