Raindrops are a very unique feature on the TrendSpider platform that allows users to visualize volume flow throughout a time period. This is very useful to see where supply and demand areas are throughout the day and how that has reacted with price action. In the video below, I will go over 3 quick case studies looking at some of the most useful Raindrop formations we have found so far.
Raindrop Charts are a new kind of financial chart designed to let you to see what’s happening in the market from a unique perspective. Raindrops are built from the same market data as Japanese candlesticks, but incorporate volume into the final visualization, showing you how price and volume play out over time.
Raindrop Charts are a new type of financial chart that leverages volume data to render visualizations that demonstrate not just where price moved, but how volume was distributed along with this move. In order to facilitate this type of chart, arbitrary breakpoints such as open and close prices must be eliminated in favor of volume weighted average prices (VWAP). Each Raindrop consists of two sides, and each side represents one half of the trading period. The bar dashes on either side represent the VWAP for that half of the trading period.
On Raindrop Charts, the color of a Raindrop depends on the relative position of the Left and Right mean (VWAP) prices to each other. The logic is similar to Japanese Candlesticks or Bars: It’s red if Right is less than Left, and green if Right is greater than Left.
Unlike other charts, there is a particular special case worth noting in Raindrop Charts when the VWAP price of each side of the Raindrop happen to be equal (or approximately equal; see more below).
We call this type of Raindrop a Blue Doji Raindrop:
As I mentioned, we believe this Raindrop is very special.