PAL Tool — Price Action Levels

PAL — Real-Time Price Action Signals and Dynamic S/R Levels

The PAL Tool (Price Action Levels) serves a dual purpose: it generates real-time price action signals at key candle formations AND draws dynamic S/R levels from those formations. Think of it as a live annotator for the chart — highlighting exhaustion, absorption, and reversal signals as they form, and drawing the levels those formations create.

• Big Red Circle: bullish exhaustion — buyers are drying up; watch for potential reversal down
• Big Green Circle: bearish exhaustion — sellers are drying up; watch for potential reversal up
• Small Green Circles: bullish pushes — buyers still present despite bearish structure
• Red AP: bullish absorption — a large buyer is absorbing all incoming sell orders at this level
• Green AP: bearish absorption — a large seller is absorbing all incoming buy orders at this level
• F (Outside Bar Failure): potential reversal at the candle high or low
• Turquoise Triangles: confirmed bullish reversals; X markers: canceled reversal signals

Using PAL Signals as LTE Triggers and Dynamic S/R

PAL signals are most powerful when they appear at pre-identified S/R levels from your TA analysis. A Big Green Circle (bearish exhaustion) at an SSR zone is a high-probability short trigger. A Red AP (bullish absorption) at a DBS zone signals a large buyer is defending — this is a potential long entry trigger in the LTE framework.

• Red AP at DBS zone: a large buyer absorbs all sells — this IS the large player filling their long position; high conviction long signal
• Green AP at SSR zone: a large seller absorbs all buys — large player filling short; high conviction short signal
• Big Red Circle at key resistance: buyer exhaustion at the top — potential short entry or profit taking signal
• Big Green Circle at key support: seller exhaustion at the bottom — potential long entry or reversal watch
• Turquoise Triangles: confirmed reversal entries; pair with S/R for highest probability
• Dynamic levels from PAL: the lines drawn by PAL formations act as real-time S/R zones; S/R flips visible as they happen
• Use PAL signals as LTE triggers — the signal itself is the Execution component of the Level-Trigger-Execution framework

At a key DBS support zone, the PAL tool displays a Red AP signal. What does a Red AP signal specifically indicate and why is it particularly significant at a DBS zone?

• Red AP = Bullish Absorption — a large buyer is absorbing all incoming sell orders at this price level; at a DBS zone this confirms that the large player the Liquidity Theory framework predicts should be buying here is actually present and filling a long position
• Red AP = Bearish Absorption — a large seller is absorbing all buy orders; appearing at a DBS zone it confirms sellers are defending this level aggressively and price will continue lower
• Red AP = Rejection at Price — the AP marker simply flags that price was rejected at that candle's high; it has no specific buyer or seller implication at any level

Answer it (with a live chart) in the interactive lesson.