Table of Content
The Raindrop Chart is a new type of financial timescale price chart that attempts to abstract away arbitrary constructs, such as open and close prices, to instead focus on changes in volume and market sentiment. In other words, Raindrop charts ignore artificial breakpoints wherever possible. The Raindrop visualization illustrates price and volume movement instead of just the price change. Briefly, it’s a human-friendly Volume Profile chart.
Here is what each of the elements represents:
- High: The highest price for the period.
- Low: The lowest price for the period.
- Left Mean: The mean price (weighted by volume) for the first half (Left side) of the period.
- Right Mean: The mean price (weighted by volume) for the second half (Right side) of the period.
The Body of each Raindrop illustrates Volume by Price for each half of the time period (shown as the left and right sides of the period).
The Left and Right mean prices essentially represent the Volume-Weighted Average Prices (VWAPs) for that half of the period. The VWAP is a popular indicator that is used to benchmark the average price of a security during a specific period of time.
Each drop is colored, depending on the relative position of the Left and Right mean prices. Raindrops where the Left price is greater than Right are colored red, Raindrops where the Right greater than Left are colored green. Raindrops where both the Left and Right are equal are colored blue.
For now, Rain Drop charts are only supported from the 10-min chart up to the daily charts. They are not supported on the 1-min, 5-min or Monthly charts.
You can find more detailed info about rain drop charts here. https://trendspider.com/whitepapers/raindrops_280519.pdf