004. After many years of search and research, I understoodAfter consulting with experts on fields of math and physics, I wanted to know if there is some kind of mathematical transformation to get those information out of the price movements
To be clear, although we observe a point or a line on a two-dimensional (2D) graph, these elements may be projections or sections of more complex forms in three-dimensional (3D) spaces or even higher dimensions. This perspective can be very useful where transformations and representations in higher dimensions provide insights that are not visible in lower-dimensional projections
Fields of knowledge like multidimensional data and differential geometry can help us
As these areas of mathematics provide the basic tools for working with spaces of various dimensions, including transformations such as rotations, translations, and scaling. These transformations help to understand how lower-dimensional objects (like points and lines in 2D) might be representations of objects in higher-dimensional spaces
In multivariate analysis, for exemple, it deals with data that have multiple dimensions (variables). For example, principal component analysis (PCA) can be used to reduce the dimensionality of a dataset, identifying the directions (principal components) that capture the most variance in the data. These components can be visualized as new dimensions that provide insights into the underlying structure of the data
And finally, data visualization, our main goal here, to plot representation of multidimensional data in a way that allows us to capture additional information
The answer lies on... INDICATORS.
Indicators can serve as multidimensional information that plots extra-dimensions for us in a 2D form.
As an exemple, here is an incredible indicator that plots A LOT of extra-dimensions. Note that the data set indicated by the arrow goes up, almost together with the data set indicated by the blue arrow. And this happens when price goes down or remain almost stable.
And although those indicators show a down trend, they can represent a going toward the computer screen, and when those indicators plot a upward trend, we can understand the price is coming foward to us from the computer screen.
Because is impossible (yet) to have a 3D screen in front of us, we must dissect the 3D information in many 2D plots and interpret them
The vertical red doted lines '1', '2' and '3' shows the points of divergence between price movements and the indicators
