Anchored VWAP
Overview
Anchored VWAP (Volume-Weighted Average Price) allows traders to calculate the average price weighted by volume from any specific point in time, such as a major high, low, earnings event, or market open. Unlike the standard session VWAP that resets daily, anchored VWAP persists from the chosen anchor point, revealing the average cost basis of all participants who traded since that event and creating dynamic support and resistance levels.
Key Concepts
Anchored VWAP calculates the cumulative volume-weighted average price from a user-selected starting point. Common anchor points include swing highs, swing lows, earnings releases, and breakout candles. Price above the anchored VWAP means the average participant from that point is profitable; below means they are at a loss. Multiple anchored VWAPs from different events create a web of institutional reference levels. The indicator dynamically adjusts as new volume data is incorporated. Confluence of anchored VWAP with traditional support and resistance creates high-probability reaction zones.
Entry Signals
Enter long on a bounce from an anchored VWAP drawn from a significant swing low. Enter short on rejection at an anchored VWAP drawn from a significant swing high. Trade breakouts when price crosses through a major anchored VWAP with strong volume. Use anchored VWAP from the most recent earnings or news event as a sentiment reference level.
Exit Signals
Target the next anchored VWAP level in the direction of the trade. Stop beyond the anchored VWAP that provided the entry — a decisive close past the VWAP invalidates the level. Exit if price consolidates around the anchored VWAP without directional momentum. Use the gap between anchored VWAP and price as a mean-reversion signal when extended.
Best Timeframes
1H, 4H, Daily
Pro Tips
Anchored VWAP is one of the most underrated technical tools available because it reveals the true average cost basis of market participants from any chosen event. When several anchored VWAPs from different time periods converge at a single price level, it creates exceptionally strong support or resistance. Many professional traders use anchored VWAP as their primary analysis framework.
More Topics in This Category
VWAP Strategies
Volume Weighted Average Price (VWAP) represents the average price an asset has traded at throughout the session, weighted by volume. It serves as a dynamic intraday fair-value benchmark used by institutional traders to gauge execution quality. For retail traders, VWAP acts as a powerful support/resistance level and trend filter — price above VWAP suggests bullish intraday bias, while price below suggests bearish bias.
Volume Spread Analysis (VSA)
Volume Spread Analysis examines the relationship between price spread (the range of a candle), closing position within that spread, and the accompanying volume to determine the intentions of institutional market participants. Developed from the work of Richard Wyckoff and refined by Tom Williams, VSA identifies accumulation, distribution, and supply/demand imbalances by reading the story that volume and price action tell together.
On-Balance Volume (OBV)
On-Balance Volume is a cumulative volume indicator that adds volume on up days and subtracts it on down days, creating a running total that reveals whether volume is flowing into or out of an asset. Developed by Joe Granville, OBV often leads price — a rising OBV during a consolidation suggests accumulation, while a falling OBV during a hold signals distribution. The direction of OBV matters more than its absolute value.
Money Flow Index (MFI)
The Money Flow Index is a volume-weighted RSI that measures buying and selling pressure by incorporating both price and volume data. It oscillates between 0 and 100, with readings above 80 considered overbought and below 20 considered oversold. Because it includes volume, MFI often provides earlier reversal signals than standard RSI, making it particularly effective for identifying exhaustion moves.