The Trading Levels are partly based on Fibonacci’s Golden Mean, the ratio .618. We apply this ratio as price, such as 1, 2, 3, 5, 8…, as cents, dollars and values. A market tends to expand and contract within this price ratio. Numbers also contain a psychological element, which in turn acts to strengthen these price levels as support and resistance in a very practical way.
Not all support and resistance levels are equal. Minor levels will temporarily delay rising or falling prices within a larger trend, while major ones could stop and reverse a trend altogether. Medium trading levels simply 50% between each major trading level. Lots of traders use support and resistance to help them plan when to enter and exit positions.