What It Is
VWAP (Volume Weighted Average Price) is the average price weighted by volume over a trading period. It shows where the majority of volume has traded - essentially, the "fair value" of an asset during the session.
Why institutions use it: Large traders use VWAP as a benchmark. If they buy below VWAP, they got a good price. If they sell above VWAP, they sold at a premium. Many algorithms are programmed to execute around VWAP.
Important: Standard VWAP resets at the start of each trading day. In 24/7 crypto markets, it typically resets at midnight UTC. This makes it primarily an intraday indicator.
Trading Strategies
VWAP Bounce Strategy Enter long when price pulls back to VWAP in an uptrend...
Using standard deviation bands around VWAP for reversals...
VWAP bounces, deviation bands, and combining with other indicators.
Institutional traders live by VWAP. If you're day trading, price above VWAP favors longs and price below favors shorts. It's that simple for intraday bias. Don't overthink it.
Continue through technical indicators
Compare this reference with related structures and readings before applying it to a live chart.