It's at least a chapter-length subject or book-length subject that cannot be explained fully in this little box. Do you want to learn and understand or do you simply want The Answer that will make you rich?

You obviously haven’t studied Dow Theory or Elliott Wave basics, or Wyckoff analysis methods or even the basics of John Murphy or any other method or strategy of technical analysis or read your first book. There are entire books devoted to support/resistance.

Answering this question for you will not get you any closer to trading. Until you have learned the definitions, how could you possibly ask a relevant question, let alone begin trading?

If there's something specific you don't understand about the definitions, we can help, but try to tell us specifically what you've done and what you don't understand.

Support and Resistance

http://stockcharts.com/school/doku.php?i...

Interpreting Support And Resistance Zones

http://www.investopedia.com/articles/tec...

The Psychology Of Support And Resistance Zones

http://www.investopedia.com/articles/tec...

Support And Resistance Reversals

http://www.investopedia.com/articles/tra...

Essentially, it is an example of crowd behavior. and it works out like that, because it is a very convenient place to buy or sell stock.

It become a self-fulfilling prophecy.

I understand that traders use older price levels to see how high or how low a stocks price was, but I don't understand why that older price level is so significant today? I've drawn the support or resistance lines to get a future resistance or support level, but what is this telling me about traders mindset?

Is it that all traders are watching these older high lows and betting on them, or is it that everyone is setting their stops to the previous price levels? Do these stops create the Resistance?

I guess I'm saying I see the older price levels like everyone else, but why is Resistance/support automatically assumed at these older prices?

Or maybe I am missing the obvious, if so sorry.