VWAP (Volume Weighted Average Price)
Volume-weighted average price — key level for institutions and day traders.
VWAP (Volume Weighted Average Price) is a technical indicator calculating the average price during the day, weighted by volume of each transaction.
Formula:
•VWAP = Σ(Price × Volume) / Σ(Volume)
•Resets at the start of each day
Why VWAP matters:
Institutional benchmark:
•Institutions aim to execute smaller orders throughout day below VWAP (buying)
•"Trading at VWAP" means fair price, not better than average
•Algorithmic orders track VWAP
Day trading support/resistance:
•Price above VWAP → bullish intraday
•Price below VWAP → bearish intraday
•Bounce from VWAP = long opportunity
•Rejection of VWAP = short opportunity
Anchored VWAP:
•VWAP calculated from specific date (swing low, halving, crash...)
•Powerful support/resistance level on higher timeframes
•Popular with institutional traders
VWAP bands:
•VWAP ± 1, 2 standard deviations
•Similar to Bollinger Bands concept
•Extreme deviations = mean reversion opportunities
Where: TradingView (free), all exchanges have VWAP level