VWAP Explained
VWAP is the average price weighted by volume over a session — the benchmark large players measure execution against, and a magnet intraday price respects.
What VWAP is
VWAP sums price times volume and divides by total volume, giving the true average price where business was actually done — not just an average of prices, but of prices weighted by how much traded there. It typically resets each session.
Institutions use it as an execution benchmark: buying below VWAP or selling above it beats the day's average. That constant institutional reference is why intraday price tends to gravitate toward and react at the VWAP line.
Reading VWAP
Price above a rising VWAP is intraday-bullish; below a falling VWAP is bearish. Pullbacks to VWAP in a trend often act as dynamic support or resistance — a common intraday continuation entry.
Anchored VWAP starts the calculation from a chosen event (an earnings gap, a swing high) instead of the session open, turning a key origin into a running fair-value line. VWAP is an intraday tool — its edge fades on higher timeframes.
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What is VWAP?
Volume-Weighted Average Price — the average traded price over a period weighted by volume. It shows the true average price where volume changed hands, and usually resets each session.
Why do institutions use VWAP?
As an execution benchmark. Buying below VWAP or selling above it means beating the session's volume-weighted average, so large orders are measured against it.
Is VWAP support or resistance?
It acts as dynamic support in an uptrend and dynamic resistance in a downtrend. Intraday price often pulls back to VWAP and reacts, making it a common continuation entry.