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TA Challenge: Put Volume-Weighted Average Price (VWAP) into your day trading toolbox
Hey, mooers! ![]()
After learning about the basics of Volume-Weighted Average Price (VWAP), now it's time to find out how it can assist traders in real cases. ![]()
Support/Resistance
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy. Past performance is not indicative of future results.
Intraday traders favor the VWAP indicator because they usually find the support or resistance level around that line. Some people think this may be a self-fulfilling prophecy. After all, many traders and algorithms are buying and selling around the VWAP line.
Nevertheless, if you combine VWAP with simple price action, VWAP trading strategies can help you find dynamic support and resistance levels in the market. When a major market trend arises, there is a higher probability that VWAP lines will release dynamic support and resistance signals. ![]()
Entry and Exit Levels
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy. Past performance is not indicative of future results.
For investors with a more passive, long-term style of investing, VWAP can serve as a reference for market prospects. Some traders may use a price crossing the VWAP line as a signal to enter a trade. If the price breaks above and goes above VWAP, they may enter a long position. Conversely, if the price breaks below VWAP, they may enter a short position. The chart above is an example of an investor who wants to go short using VWAP to make entry decisions. ![]()
Pullback Stop
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy. Past performance is not indicative of future results.
We have introduced how VWAP indicates support/resistance levels. Experienced traders do not always take immediate action when stocks break support levels. However, if the stock begins to roll over and breaks the VWAP along with the most recent low—the odds are you have a problem. And what if it breaks VWAP and forms a resistance level near VWAP? This may be a serious signal that prices will continue to move lower for the period ahead. ![]()
VWAP + other indicators
There are many ways to trade with VWAP. Still, it is usually a good idea to complement using any single trading indicator with other indicators, such as momentum indicators like MACD or RSI.
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy. Past performance is not indicative of future results.
Here is an example of using VWAP with EMA10 in intraday trading. The EMA is more sensitive to price movement and provides more timely results than the MA. For this reason, the short-term EMA is generally effective for intraday trading. Utilizing VWAP and EMA10 together is straightforward, as VWAP gauges the strength of the stock price, and EMA reveals the movement of the trend. Take a look at the example below. You can see that when EMA10 breaks above VWAP, the stock price moves up quickly. When EMA10 falls below VWAP, the stock price starts to fall. ![]()
Tap the following post to learn the basics about VWAP!
>> Get to know Volume-Weighted Average Price (VWAP) in one chart
>> Get to know Volume-Weighted Average Price (VWAP) in one chart
Let's discuss
What other indicators can be used with VWAP to help strengthen the predictions? We are sure you can think of more! Share your thoughts in the discussion, and you'll have a chance to win a $5 USD stock cash coupon!![]()
What other indicators can be used with VWAP to help strengthen the predictions? We are sure you can think of more! Share your thoughts in the discussion, and you'll have a chance to win a $5 USD stock cash coupon!
Event time: Now – April 6, 08:59 AM EDT/08:59 PM SGT/11:59 PM AEDT
Review the previous TA topics:
MA: How do you identify trends with moving averages?
BB: Breakout? Reversals? How to use Bollinger Bands?
RSI: How does RSI tell whether a stock is overbought or oversold?
KDJ: A short-term trading tool you can't miss
PSY: Emotional trading is bad? PSY doesn't think so!
SAR: How to use the SAR to spot reversal signals?
BIAS: A day trading tool for the rebound
OBV: Forecast market moves & spot reversals
Support levels: Chart to find breakdown stocks
TA Challenge Special: Can you solve the trading clues?
TDS 9: How to identify the turning point with TDS 9?
MA: How do you identify trends with moving averages?
BB: Breakout? Reversals? How to use Bollinger Bands?
RSI: How does RSI tell whether a stock is overbought or oversold?
KDJ: A short-term trading tool you can't miss
PSY: Emotional trading is bad? PSY doesn't think so!
SAR: How to use the SAR to spot reversal signals?
BIAS: A day trading tool for the rebound
OBV: Forecast market moves & spot reversals
Support levels: Chart to find breakdown stocks
TA Challenge Special: Can you solve the trading clues?
TDS 9: How to identify the turning point with TDS 9?
Disclaimer:
This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.
This presentation is for information and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. See this link for more information.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Matthew D Mr VWAP :
Meta Moo OP Mr VWAP :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Hi Mr VWAP, you're welcome to post more thoughts about VWAP under the topic! We will award 5 USD stock cash coupon to informational posts ![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
nyseoption : Wow, I never considered using this until now. Volume weighted price average seems like a solid way to find resistance & support. Thanks for this article!
72799578 Sassy : Very interesting
72799578 Sassy : Thanks for the info Moomoo
Marcus El Henson : I understand way more than I did
宁静哥 : If the institution reverses a very large amount on the same day, the weighted average price will not change much on the same day. In short, trading volume has become the main tool for luring retail investors. The only thing left to believe is the price.
宁静哥 : The problem is that the trading volume provided by the system is not the real-time trading volume of this stock in the entire market. The weighted average price calculated in this way is not necessarily reliable. Look. The trading volume of K-line corresponding mobile phones and computers in the same cycle is not consistent. Same-day trading volume is not equal to the sum of the day's timeshare volumes. The same stock is traded on several exchanges, and all you see is a problem with exchange data and the like.
Lithanjah : A stock trading above the VWAP as the line rises indicates an uptrend and vice versa on a downtrend. For example, if stock XYZ has a falling VWAP line, then you may want to wait for the stock price to pierce the VWAP and reverse back up to play with the trend.
Spider-guy : isnt vwap, niki minajs song
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