VWAP is one of the most common indicators, and most traders have a strong opinion about it
I made a basic thread to help y'all understand it🧵⬇️
VWAP is short for Volume-Weighted Average Price
VWAP measures a stock's average price during a time period, adjusted for volume
The specific formula used to determine VWAP is👇
Traders commonly use VWAP in 2 ways
1) Sentiment tracking
2) Support and resistance
VWAP as a sentiment tracker
When price is above VWAP, it can be considered 'strong'
When price is below VWAP, it can be considered 'weak'
This works on trend days, but can be dangerous on range days
VWAP as support and resistance
Similar to an EMA, lots of traders view a VWAP touch as a buying opportunity. If the trend has been bullish and we pullback to VWAP, many will buy long.
Lots of traders also view VWAP as tough resistance to break, and will take profit near VWAP
VWAP settings
I'm pretty sure this is default (or close) but here are my VWAP settings on TradingView
My opinion on VWAP
I think VWAP is something you can use if you need more key levels, but isn't a necessity
It's very useful for small caps, but that sector isn't particularly hot right now
I prefer to use it like an EMA, don't overcomplicate it
Hope this helped y'all understand VWAP🤝
Check out my discord if you need a small trading group to learn and grow with👇
upgrade.chat/slappy-central…
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