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Category: Ruslan’s Laboratory

Blue Raindrops: Potentially Effective for Identifying Support/Resistance & Reversals Levels

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:

Blue raindrop.

As I mentioned, we believe this Raindrop is very special.

Analysis Shows Stock Prices Tend to Cluster

One of my favorite parts of my job is to mess around with market data. Eventually, I found myself with a scatter plot comparing the price versus volume for Walmart Inc. (NYSE: WMT).

This chart was built with two-and-a-half years worth of ten minute candles, with each point representing one candle. The X-axis represents the average price, calculated as [(High + Low)/2], and the Y-axis represents the volume of each candle.