VWAP
Volume Weighted Average Price - a reference for understanding intraday price relative to volume.
What It Does
VWAP stands for Volume Weighted Average Price. It calculates an average price that also takes trading volume into account, giving more weight to prices where more volume was traded. VWAP is commonly used as an intraday reference for understanding where current price is trading relative to the session's volume-weighted average.
How to Use It
Add VWAP to an intraday chart and observe whether price is trading above, below, or directly around the VWAP line. Traders often use it as a reference for trend, price location, support, resistance, and intraday market behavior.
Watch for:
- • Price holding above VWAP
- • Price holding below VWAP
- • Tests of VWAP
- • Reclaims of VWAP
- • Rejections from VWAP
- • Consolidation around VWAP
- • Trend continuation away from VWAP
- • Confluence with support, resistance, volume, and market structure
VWAP should be used as a reference tool, not as an automatic buy or sell signal. Combine it with price action, trend, structure, volume, and the larger market setup.
Video Lesson
A video lesson demonstrating VWAP in action will be added soon. Check back later for step-by-step examples of how to use this tool effectively in your chart analysis.