I have attached a diagram for your reference. The flexible arm will be floating in water. So I need some sort of position feedback sensor or algorithm to detect the position with reference to the fixed axis of the flexible arm. Any suggestions?
You can use the arm to pull a cable, which is moves some indicator up and down a scale. You can also use a potentiometer, either linear or rotary for this. There are a lot of ways, there is no best method unless you clearly state your performance requirements.