Video Transcript:
In this video, I’ll show you the best place to anchor VWAP for intraday trading. This is one of my favorite Anchored VWAP setups because it gives you a clean, fair price level that you can use as support or resistance. So, let’s get straight to the chart. You always want to anchor VWAP to an important place, and that place should be important to as many people, algos, hedge funds, or institutional traders as possible. The start of the week is a very important place for almost all intraday traders. They all base their trading decisions around what the price has been doing since the start of the week. Right? So that’s why you want to anchor the VWAP at the start of the week. Then the VWAP line, this blue line, represents the fair price since the start of the week, or in other words, the average price of an average trader trading this. So the logic is the same. You wait for pullbacks, and when the price makes a pullback to the VWAP, you enter your short. Right? So that’s a short from here, short from here, another short would be from here, another short trade opportunity from here, another one from here, another one from here, and from here. This would be a losing trade. By the way, those setups that I’m showing you work best in trending markets. They work best in markets that are doing this. Simply put, when they are like this. Right? If the market is going sideways, then those setups are not as good as when you use them in a trend like this.
Anyways, back to the setup. The reason this works is, again, sellers want to sell for a fair price. Right? So sellers want to sell from here, from here, from here, and from here. They don’t want to sell, for example, from this place. Right? At least, not the clever guys. The clever guys don’t want to sell here because this is way below the fair price. The clever guys know where the fair price is. The fair price is on their charts. They know where it is, and it’s not very smart to enter short here, way below the fair price. So they wait. They wait, and when the price hits the fair price, this is where they initiate their shorts. That’s how the clever guys trade.
Now here is a long trade scenario. Again, we anchor the VWAP to the candle, which is the first candle of the week. By the way, we are still looking at a 30-minute chart. Right? So this is the first candle of the week. You anchor the VWAP there, and as you can see, the price is already making small reactions there. All those places are signals for you to go long. Obviously, you can combine this with other strategies that you are trading with. You can use this just as a bonus strategy to give strength to your own strategy or to your own levels. Right? But you can also trade this as a standalone setup.
Now I want you to take a look here. This is where the price goes past the VWAP and starts to move below it. That means that the VWAP now represents resistance. Sellers want to sell for a fair price. Right? Everybody wants to trade at a fair price. Buyers want to buy at a fair price. Sellers want to sell for a fair price. At this point, all those people who wanted to sell wanted to sell for a fair price represented by the VWAP. That means when the price went below the VWAP here, you want to consider this VWAP line a new resistance. That means this is where you go short from. Right? What happens next? The price goes above the VWAP again, so it should be longs again. So it is support again. Right? So here it was support. Then it turned into resistance because the price went below the VWAP. Now, when it is above the VWAP again, you consider the VWAP as support. Buyers want to buy at this fair price. So if the price, for example, hit the VWAP here, which it didn’t, then it would be a long from this place.
Now one more example of this. You anchor the VWAP to the start of the week right here. The price is rotating around the VWAP, so there’s not much to do. But then it moves away. That means you should focus on longs. Right? Because VWAP represents a support line here. And as you can see, the price is reacting to it pretty nicely there. What happens next is there is some kind of macro news, which drives the price below the VWAP. All the traders who want to sell for a fair price want to sell at the Anchored VWAP. Right? And remember, we are still talking about the fair price since the beginning of the week, which is here. Right? That’s what the VWAP represents: the fair price since the start of the week, or in other words, the average price of an average trader. So when the VWAP here turned into resistance, you want to trade every hit of the resistance here. Unfortunately, here and here, the price missed that resistance, but here, the price hit that VWAP, and that’s why you go short from there.
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