Lesson 5 of 7 · Indicators
VWAP
VWAP is where most volume traded.
The VWAP weights each trade by its volume, not by time alone. The result is the closest single line to fair value over the session. Institutions use it to benchmark fills: buying below VWAP is considered efficient execution.
Price above VWAP.
When price opens and stays above the VWAP line, buyers have controlled most of the session's volume. Intraday traders watch pullbacks to VWAP from above as potential entries.
Price dipped under VWAP and just pushed back above it. Where does it go?
Reveal what happened
It went up. Price reclaimed VWAP and continued higher. A VWAP reclaim on follow-through volume is a common intraday long setup. It doesn't always hold, but when buyers defend that level the short-term bias is up.
It's midday. Price has held above a rising VWAP all morning. What does that tell you?
Show the answer
B. Buyers have had the edge across most of the day's volume. Price above VWAP means the volume-weighted average of all trades so far is below current price. Buyers have controlled most of the day's volume.