Video Transcript:
Are you trading with VWAP or anchored VWAP and not getting consistent results? Then this video will help you. I’ll show you how to combine VWAP and Volume Profile together to create strong trading combos that reveal clean and reliable support and resistance zones. This will not only increase your win rate, but it will also improve your trading consistency, which I think is very important. So let’s get to it.
VWAP represents the trading position of the average trader, and many market participants use it as a reference point for their trade entries. Now imagine you want to enter a short trade on this chart. Price is dropping and you want to enter a short position. Where is the best place to enter? It’s not wise to enter randomly or at the current daily low. The logical entry point is where the average market participant sold. You want to sell at fair value, not at the daily low. That fair value is represented by VWAP, shown here as the blue line.
When price pulls back to VWAP, this is where you want to sell, because this is the fair price. If an institutional algorithm is trading, the goal for the day could be, for example, to sell a certain number of contracts on EUR/USD at VWAP or better. In this case, “better” means above VWAP. Price drops below VWAP, then pulls back to it, sellers sell at fair value, and that triggers the sell-off. The general short strategy is simple: wait until price is below VWAP, wait for a pullback to VWAP, and then short from there.
For a long trade, it’s the same logic, just reversed. If price is above VWAP, buyers are in control. When price pulls back to the VWAP line, that’s where you want to go long. This is the most basic way to trade VWAP. Personally, I like to see more before taking a trade. I want confirmation or a combination of multiple strategies. That’s where combos come in.
Combos are areas where multiple independent setups point to one strong support or resistance zone. Simple VWAP setups can work, but they don’t always produce consistent results. If you want better consistency and a higher win rate, you need combos. I personally look for combos in almost all my trades. I’d say around 80–90% of my trades are based on them.
Now let’s look at combos using VWAP, price action, and Volume Profile. This is an S&P 500 five-minute chart. The daily VWAP is anchored to the start of the day, which for me is the beginning of the Asian session. Price moves well below VWAP and then pulls back to it. If you were trading VWAP alone, you would short immediately. But since we’re looking for combos, notice how price reacted here in the past. This zone acted as support, then the support broke and turned into resistance.
This price action resistance is very close to the VWAP resistance. These levels don’t need to align perfectly — they are zones. If they are close enough, I consider it a valid combo and trade from there, because combos have a much higher win rate.
In this next example, we actually have a triple combo: price action, Volume Profile, and VWAP. Volume Profile shows heavy volumes in this rotation. VWAP is anchored to the start of the trend, and price pulls back very close to VWAP. There is also an important swing high that previously acted as strong resistance, then turned into support near VWAP. On top of that, Volume Profile shows a clear volume bump, and I like to trade from the beginning of those volume bumps. All three factors point to the same area. That’s the combo, and it’s telling you to go long.
I enter trades from the first barrier of the combo, not from VWAP itself. I do this because I don’t want to miss the entry. If I traded VWAP alone, I would miss this trade. That’s why the first barrier matters.
Next example is Bitcoin on the daily chart, from when BTC was below 20K. We have a rotation with heavy volume, followed by a strong trend. VWAP is anchored to the start of the trend, and price pulls back to it. Volume Profile shows a strong volume cluster, and I trade from the beginning of that heavy volume zone. This aligns perfectly with VWAP. There is also a former resistance that turned into support, adding even more strength to the level. When the market gives you this kind of combo, there’s no need for extra confirmation. You just go long.
The last example is Procter & Gamble on a five-minute chart. Here I’m using two anchored VWAPs. One is anchored to the swing low, and the second is anchored after the gap. For stock trading, gaps are very important anchor points. These two VWAPs create a support zone. Volume Profile also points to the same area. All of these factors align and give a clear signal to go long.
This is how you use VWAP and Volume Profile combos to trade strong, high-probability levels.
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