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.
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.
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.