In this example, a “flip” Raindrop has been formed in which the majority of the trading volume was at a higher price during the first half of the period (left side) and then moved to a lower price during the second half of the period (right side). Let’s have a look at a few potential distinct Raindrop formations. The width on both sides of a Raindrop is plotted using the same scale to make them easy to compare. In Raindrop charts, the amount of volume is illustrated by the width of a Raindrop at any particular price level, which will vary based on the volume of transactions traded at that price level. Please refer to the illustration below to understand how all three relative positions for a drop appear on the chart. Raindrops where both the Left VWAP price and Right VWAP prices are equal Raindrops where the Right volume-weighted average price is greater than the Left VWAP price Raindrops where the Left volume-weighted average price is greater than the Right VWAP price It represents the Volume-Weighted Average Price (VWAP) for the second half (Right side) of the period.Įach Raindrop is colored depending on the relative position of the Left and Right volume-weighted average prices. It represents the Volume-Weighted Average Price (VWAP) for the first half (left side) of the period. It represents the lowest price for the period. It represents the highest price for the period. It represents the Volume by Price for each half of the time period (shown as the left and right sides of the period). The Raindrop visualization illustrates price and volume movement instead of just the price change, where each bar known as a Raindrop, covers a fixed period of time (such as one hour) and includes a body and four key data points as illustrated below: Body
Let’s get started 🚀 Body & Key Data Points Examples of Distinct Raindrop Formations.In this documentation, we will explore the following: This is where the Raindrop Charts™ from TrendSpider fills the gap by providing the traders with the volume and price data combined into a single visualization while also filtering out some of the distractions like arbitrary open and close prices. Also, most of the time, these secondary sub-charts are a simple ‘volume underlay’ chart, a bar chart that shows volume by period along the bottom and are very high level in nature often compromising context, granularity, and detail.Īs a result, the traders are forced to make decisions using incomplete information. However, many of these chart types do not recognize trading volume, leaving no other choice but to resort to a secondary sub-chart or some other indicator. There are many different types of charts used by traders and financial analysts to outline the changes in price action over a period of time like Traditional Japanese Candlesticks (and price bars), Hollow Candlesticks, Heikin Ashi, etc.
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