I have it where I can make the water-balloon deform (using softbody), like it would if it is moved a little but mainly resting. However what I have a hard time with is getting the Water-Balloon to swing naturally. In my blend file there is a cylinder that is supposed to be like a solid plastic straw or wooden dowel. Then the water-balloon. The dowel is in the water balloon and it is rotating. The balloon should not just jiggle but the main weight should take longer to be moved. Plus at the end it should swing back and forth tell it comes to a rest. I can get somewhat close to what I want with soft-Body simulation. Still if there is someone else out there who has used soft body more so then maybe they can help improve it.
Attachments
WaterBalloonSwingtest.blend (1 MB)