VWAP: Volume Weighted Average Price
What is VWAP?
VWAP stands for Volume Weighted Average Price. It’s a trading benchmark that gives the average price an asset has traded at throughout the day, weighted by volume. This makes it
more accurate than a simple moving average, especially for intraday analysis.
Unlike regular moving averages that treat every price equally, VWAP emphasizes price levels where heavier trading occurred, providing a realistic snapshot of the true average market price institutions and algorithms are interacting with.
The VWAP Bounce + Rejection Entry Strategy helps you enter trades at optimal zones of value using the Volume-Weighted Average Price (VWAP). This dynamic line acts as a magnet for price and often becomes a bounce zone when volume aligns. Instead of guessing support or resistance levels, this strategy lets you use VWAP as a real-
time value guide, waiting for price to pull into it, show rejection, and bounce away with momentum.
How VWAP Works
The VWAP is calculated cumulatively from the market open:
VWAP = (Cumulative Price × Volume) / Cumulative Volume
With each tick or candle:
Multiply the price by volume.
Add it to the previous cumulative total.
Divide by the total volume so far.
This means VWAP resets daily and builds throughout the session, offering real-time insight Into what traders are willing to pay based on volume-weighted interest.
Why VWAP Matters
When price pulls back into VWAP and bounces with rejection, it signals that traders are defending value. Smart money often uses VWAP as a tool for entries or exits. When you align with that behavior and combine it with a clean rejection candle, you get a high-probability trade setup that’s based on logic and flow, not emotion.
1. Institutional Benchmark
Institutions and smart money often aim to buy below VWAP (to secure a better-than-average price) and sell above VWAP. So the line often acts as a magnet or barrier where decisions cluster.
2. Intraday Bias Gauge
Price above VWAP: Buyers dominate; bullish bias.
Price below VWAP: Sellers control; bearish bias.
3. Support/Resistance & Mean Reversion
VWAP behaves like a dynamic equilibrium level. Price frequently:
Pulls back to VWAP during trends
Here's a clear down trend 50 and 200 ma cross over. Await a pull back to trend or ma for continuation.
Reverts to VWAP in consolidations
Finds support/resistance at or around VWAP
How to Use VWAP in Trading
1. Trend Confirmation
Use VWAP as a bias filter: if price is cleanly above, favor longs if below, favor shorts.
Combine it with higher highs/lows (or lower highs/lows) to validate trend strength.
2. Entry Opportunities
In an uptrend: look for pullbacks to VWAP as a buy zone
In a downtrend: look for retests of VWAP as a short opportunity.
3. Mean Reversion Strategy
If price is far extended from VWAP, and volume shows divergence or exhaustion, consider
fading the move with a target toward VWAP (especially in range-bound sessions).
4. Anchored VWAP
You can anchor VWAP to specific candles, like a major high, low, or news release, to gauge
value zones within a custom context.
Best Timeframes for VWAP
Intraday trading (1min to 15min): Ideal for scalpers and day traders.
VWAP resets daily it’s not designed for swing trading unless you're using anchored VWAP.
Pro Tips
Don’t use VWAP in isolation pair it with:
Market structure (HH/LL, BOS/CHoCH)
Volume spikes or divergence
Liquidity zones (order blocks, FVGs, imbalance)
Session opens (London/NY open confluence)
Use VWAP for confluence with other tools, not as a single trigger.
VWAP is more than just a line it's a window into the heartbeat of the market. It shows where real money is positioned and whether you’re trading with or against that flow.
Used with structure and context, VWAP becomes a weapon for precision entries, smart risk, and clean execution.
Vwap entry types
1. VWAP Bounce (Mean Reversion Entry)
Best for: Range-bound or early in the session.
Entry: Price pulls back to VWAP and shows signs of rejection (e.g., pin bar, engulfing candle).
Confirmation: Look for confluence with support/resistance, order blocks, or volume spikes.
Stop: Below the recent swing low (if long).
Target: Prior high or key level.
2. VWAP Break and Retest (Trend Continuation)
Best for: Trending markets.
Entry: Price breaks above VWAP with momentum and retests it from the other side.
Confirmation: Lower time frame bullish structure, bullish candle on retest.
Stop: Below VWAP or structure low.
Target: pivot levels or structure high, fib levels.
3. VWAP Reclaim (Reversal Entry)
Best for: Capturing a shift in momentum.
Entry: Price moves below VWAP, then reclaims it (closes back above with strength).
Confirmation: Break of market structure + volume surge
Stop: Below reclaim candle.
Target: Range high or key fib levels.
4. VWAP Confluence with Other Indicators
Combine with:
Moving Averages: e.g., 9, 50 and 200 SMA OR EMA
Fibonacci retracement levels
Order blocks / Liquidity zones
Pivot points
Use VWAP as a dynamic support/resistance level and enter when multiple signals align.
Vwap examples
What is VWAP?
VWAP stands for Volume Weighted Average Price. It’s a trading benchmark that gives the average price an asset has traded at throughout the day, weighted by volume. This makes it
more accurate than a simple moving average, especially for intraday analysis.
Unlike regular moving averages that treat every price equally, VWAP emphasizes price levels where heavier trading occurred, providing a realistic snapshot of the true average market price institutions and algorithms are interacting with.
The VWAP Bounce + Rejection Entry Strategy helps you enter trades at optimal zones of value using the Volume-Weighted Average Price (VWAP). This dynamic line acts as a magnet for price and often becomes a bounce zone when volume aligns. Instead of guessing support or resistance levels, this strategy lets you use VWAP as a real-
time value guide, waiting for price to pull into it, show rejection, and bounce away with momentum.
How VWAP Works
The VWAP is calculated cumulatively from the market open:
VWAP = (Cumulative Price × Volume) / Cumulative Volume
With each tick or candle:
Multiply the price by volume.
Add it to the previous cumulative total.
Divide by the total volume so far.
This means VWAP resets daily and builds throughout the session, offering real-time insight Into what traders are willing to pay based on volume-weighted interest.
Why VWAP Matters
When price pulls back into VWAP and bounces with rejection, it signals that traders are defending value. Smart money often uses VWAP as a tool for entries or exits. When you align with that behavior and combine it with a clean rejection candle, you get a high-probability trade setup that’s based on logic and flow, not emotion.
1. Institutional Benchmark
Institutions and smart money often aim to buy below VWAP (to secure a better-than-average price) and sell above VWAP. So the line often acts as a magnet or barrier where decisions cluster.
2. Intraday Bias Gauge
Price above VWAP: Buyers dominate; bullish bias.
Price below VWAP: Sellers control; bearish bias.
3. Support/Resistance & Mean Reversion
VWAP behaves like a dynamic equilibrium level. Price frequently:
Pulls back to VWAP during trends
Here's a clear down trend 50 and 200 ma cross over. Await a pull back to trend or ma for continuation.
Reverts to VWAP in consolidations
Finds support/resistance at or around VWAP
How to Use VWAP in Trading
1. Trend Confirmation
Use VWAP as a bias filter: if price is cleanly above, favor longs if below, favor shorts.
Combine it with higher highs/lows (or lower highs/lows) to validate trend strength.
2. Entry Opportunities
In an uptrend: look for pullbacks to VWAP as a buy zone
In a downtrend: look for retests of VWAP as a short opportunity.
3. Mean Reversion Strategy
If price is far extended from VWAP, and volume shows divergence or exhaustion, consider
fading the move with a target toward VWAP (especially in range-bound sessions).
4. Anchored VWAP
You can anchor VWAP to specific candles, like a major high, low, or news release, to gauge
value zones within a custom context.
Best Timeframes for VWAP
Intraday trading (1min to 15min): Ideal for scalpers and day traders.
VWAP resets daily it’s not designed for swing trading unless you're using anchored VWAP.
Pro Tips
Don’t use VWAP in isolation pair it with:
Market structure (HH/LL, BOS/CHoCH)
Volume spikes or divergence
Liquidity zones (order blocks, FVGs, imbalance)
Session opens (London/NY open confluence)
Use VWAP for confluence with other tools, not as a single trigger.
VWAP is more than just a line it's a window into the heartbeat of the market. It shows where real money is positioned and whether you’re trading with or against that flow.
Used with structure and context, VWAP becomes a weapon for precision entries, smart risk, and clean execution.
Vwap entry types
1. VWAP Bounce (Mean Reversion Entry)
Best for: Range-bound or early in the session.
Entry: Price pulls back to VWAP and shows signs of rejection (e.g., pin bar, engulfing candle).
Confirmation: Look for confluence with support/resistance, order blocks, or volume spikes.
Stop: Below the recent swing low (if long).
Target: Prior high or key level.
2. VWAP Break and Retest (Trend Continuation)
Best for: Trending markets.
Entry: Price breaks above VWAP with momentum and retests it from the other side.
Confirmation: Lower time frame bullish structure, bullish candle on retest.
Stop: Below VWAP or structure low.
Target: pivot levels or structure high, fib levels.
3. VWAP Reclaim (Reversal Entry)
Best for: Capturing a shift in momentum.
Entry: Price moves below VWAP, then reclaims it (closes back above with strength).
Confirmation: Break of market structure + volume surge
Stop: Below reclaim candle.
Target: Range high or key fib levels.
4. VWAP Confluence with Other Indicators
Combine with:
Moving Averages: e.g., 9, 50 and 200 SMA OR EMA
Fibonacci retracement levels
Order blocks / Liquidity zones
Pivot points
Use VWAP as a dynamic support/resistance level and enter when multiple signals align.
Vwap examples
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.