We are trying to create a project that recognizes 3 dimentional motion. Now, the instrument will be hand held and it should be able to detect the shape or sybmbol being made and then transmit it to a controller. It will not be touching any surface, that is why it needs to be able to understand its location in space. A button needs to be pressed and it will start sensing. Think Harry Potter's wand doing a swish and flick.
Any ideas on the necessary sensor? and how about similar projects and their implementation?