3 - DIMENSIONAL ANALYSIS (tutorial)

We can assume that price level is a point in motion, moving across obstacles.
These obstacles are represented in price action as support and resistance levels as price moves
to the target point


The obstacles can be classified as PRIMARY SUPPORT / RESISTANCE and SECONDARY SUPPORT / RESISTANCE
Continuation patterns or accumulation mostly occur at secondary support/resistance zones
Reversal patterns or distribution phase normally occur at primary support/resistance zones
The origin of a trend is a primary support in case of an uptrend and a primary resistance for a downtrend.


From the above, we can conclude that a target point always has a time magnitude and price magnitude.
Time axis is one dimension on the chart as price axis is also one dimension when both parameters are
treated separately. When these two dimensions are unified, that is we consider the amount of time taken
for price to reach the target, we would have a projection that takes the shape of a right angled triangle or
a half section of a rectangular shape with the base as time axis and the height as price axis.


Half section of a rectangular shape


From geometry we know that the diagonal of a rectangle or right-angled triangle is given by
DIAGONAL² = BASE² + HEIGHT²
Here our base = time axis
Height = Price axis
Diagonal = Price-Time (third dimension)
Then (PRICE-TIME)² = TIME² + PRICE²

This 3rd dimensional value is also called Price-time vector and this is the single most important value
that controls all expansions and contractions in price action within their specific domain.
We would continue the discussion another time
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