Identifying the levels

The simplest way to gauge an area's significance is to count touches: how many times has price come here and reacted? Two touches are a start; three or more strengthen the evidence that the market watches this area. The sharpness of the reaction matters too — price turning away with long wicks and strong bodies tells a clearer story than price drifting off reluctantly.

When drawing them, keep your habit from level 2: draw zones, not thin lines. If price turned once at 100.0 and once at 99.7, the support is not "100.0" but "the 99.7–100.0 area". The ceiling and floor of a sideways market are themselves a resistance and a support — the band you met in level 2 now earns its proper names.

Time is a factor too, but it works in two directions: recent reactions are usually more relevant than ones from years ago, while zones formed on higher timeframes leave more durable marks than those on lower ones. You can find dozens of "levels" on any chart; the skill is focusing on the few areas with the most accumulated evidence. A crowd of lines is noise, not analysis.