🎯 Action Levels: Where Price Decisions Are Made

Most traders draw support and resistance lines where price used to be. Action Levels tell you where price is going to react.

Action Levels in RelicusRoad Pro identify the critical price zones where institutional traders (banks, hedge funds) make their key decisions. These aren’t just lines on a chart; they are liquidity magnets—areas where significant buying or selling pressure is waiting to be unleashed.

What Are Action Levels? (And Why They Work)

Action Levels represent Institutional Price Levels (IPLs).

In professional trading, large orders cannot be executed all at once without crashing the price. Institutions must wait for price to reach specific “zones of liquidity” where enough matching orders exist to fill their positions.

The “Magnet Effect”

Price is often drawn to these levels because that is where the orders are.

• Before the touch: The level acts as a magnet, pulling price toward it to test liquidity.
• At the touch: A battle occurs. If the institution defends the level, price reverses (Rejection). If they withdraw, price blasts through (Breakout).

How RelicusRoad Calculates Them

Unlike basic support/resistance which is subjective, Action Levels combine:

1. Volume Profile: Where was the most money exchanged?
2. Market Structure: Where were the major swing points?
3. Psychological Barriers: Round numbers and “00” levels.

The 3 Tiers of Action Levels

Not all price levels are equal. RelicusRoad Pro classifies them by strength so you know when to hold and when to fold.

🔴 Major Action Levels (Red)

The “Concrete Wall” These are weekly or monthly significance levels.

• Probability: High (80%+ reaction rate).
• Who trades here: Big banks, position traders.
• Strategy: Look for major trend reversals or multi-day swing trades.
• Risk: Use wider stops; volatility will be high here.

🟠 Intermediate Action Levels (Orange)

The “Glass Floor” These are daily or 4-hour levels.

• Probability: Moderate (65-75%).
• Who trades here: Day traders, swing traders.
• Strategy: Great for “take profit” targets or intraday reversals.
• Risk: Standard risk; price may pierce these briefly before reversing.

🟡 Minor Action Levels (Yellow)

The “Paper Curtain” These are intraday (1H/15M) levels.

• Probability: Lower (50-65%).
• Who trades here: Scalpers, HFT algorithms.
• Strategy: Scalping entries only. Do not rely on these for long-term stops.
• Risk: Tight stops; these break easily in a trending market.

How to Trade Action Levels (Proven Strategies)

Strategy 1: The “Touch & Reject” (Reversal)

This is the classic institutional defense setup.

The Rule: Do not enter on the touch. Enter on the rejection.

1. Identify: Price moves rapidly toward a Red Major Level.
2. Wait: Watch for price to pierce the level and then close back inside (a “wick” or “pin bar”).
3. Trigger: Enter when the next candle breaks the low (for shorts) or high (for longs) of the rejection candle.
4. Why it works: The wick proves that buyers tried to push higher, but institutions slammed the door shut.

Strategy 2: The “Build & Break” (Breakout)

When an Action Level fails, it usually fails hard. This strategy catches the momentum.

The Rule: Look for consolidation tightly against the level.

1. Identify: Price approaches a level but doesn’t bounce away. It starts moving sideways, “hugging” the level.
2. Context: This is called “buildup.” It means orders at the level are being absorbed.
3. Trigger: Enter when a candle closes decisively beyond the level.
4. Why it works: The “wall” has been chewed through. Once the level breaks, stop-losses from the other side trigger a cascade of momentum.

Strategy 3: The “Sandwich” (Range)

When price is trapped between two clear Action Levels.

1. Identify: Price is bouncing between a Red Level (Support) and an Orange Level (Resistance).
2. Execution: Buy at the bottom Red Level, Sell at the top Orange Level.
3. Target: The middle of the range or the opposite level.
4. Invalidation: If price breaks the range, cut the trade immediately.

Risk Management at Action Levels

Trading institutional levels requires professional risk management. The volatility at these zones can be brutal.

• Position Sizing: At Major (Red) levels, you can often use standard sizing because the invalidation point is clear. At Minor (Yellow) levels, reduce size by 50% as they are more prone to noise.
• Stop Placement: Never place your stop exactly on the line. Institutions hunt these spots. Place your stop ATR x 1.5 behind the Action Level to survive the “stop hunt” wicks.
• Profit Taking: Action Levels make excellent targets. If you are long, place your Take Profit a few pips before the next Action Level to ensure you get filled before the reversal.

Common Mistakes to Avoid

1. “Blind Limit” Trading: Placing a limit order exactly at the line and walking away. Correction: Always wait for price action confirmation.
2. Ignoring the Trend: Selling a Red Level when the market is in a massive uptrend news event. Correction: In strong trends, use Action Levels for pullbacks (buying support), not for fighting the trend (selling resistance).
3. Trading Yellow Lines During News: Minor levels are ignored during high-impact news (NFP, CPI). Correction: Stick to Red Major levels during volatile events.

Conclusion

Action Levels give you the “cheat sheet” to where the big players are doing business. They strip away the noise of the chart and highlight the zones that actually matter.

By waiting for price to react at these specific coordinates, you stop trading against the house and start trading with it.

Ready to see the market’s structure? Discover RelicusRoad Pro and get Action Levels on your chart today.