Unlocking Price Insights: A Guide to Anchored VWAP in TradingView

Standard VWAP vs Anchored VWAP

Anchored VWAP in TradingView Explained

Anchored VWAP (Volume Weighted Average Price) is a technical analysis tool available in TradingView for stocks and other financial instruments. It's a variation of the standard VWAP that offers more flexibility for analysis.

The formula for Anchored VWAP is:

Anchored VWAP Formula = Σ(Price x Volume) / ΣVolume 

Understanding Supply and Demand with the AVWAP:

The AVWAP helps traders understand supply and demand, key factors influencing market prices. It considers volume, price, and time to create a line that moves up with high demand and down with high supply.

This is especially useful for swing traders and long-term traders (not day traders) who focus on these broader trends.  Read [1] for more details. 

Anchored VWAP full walkthrough – what is AVWAP? (YouTube link)

Key Facts

Benefits of Anchored VWAP:

• Targeted Analysis: You can analyze the VWAP based on a specific event or period, like a breakout point or earnings announcement.
• Flexibility: Compares the current price to the average price since your chosen anchor point, potentially indicating buying and selling pressure.

How to Use Anchored VWAP:

• Find the Anchored VWAP tool: Look for it in the "Drawing Tools" section of TradingView.
• Set the Anchor Point: Click on the chart where you want the calculation to begin.
• Analyze the VWAP Line: The line will show the average price weighted by volume since your chosen anchor point.

When to Use Anchored VWAP

• Identifying potential breakouts from established price ranges.
• Analyzing post-earnings performance compared to the pre-earnings VWAP.
• Evaluating price movements relative to significant events.

Limitations:

• Not a perfect predictor of future prices.
• Use it alongside other technical and fundamental analysis for a comprehensive understanding.

Example

The chart above displays an Anchored VWAP for FXI alongside an OBV indicator in the lower panel. To set an anchor point in Anchored VWAP (Volume-Weighted Average Price) and conduct targeted analysis, follow these steps:

1. Identify a specific price level or event that you want to use as your anchor point. 
• This could be a significant high, low, gap, earnings announcement, or any other relevant point in time.
2. Select the Anchored VWAP Tool:
• On TradingView platform, find the Anchored VWAP tool (see the diagram below).
• Click on it to activate the drawing tool.
3. Click on the Chart:
• Click on the specific candlestick or price level that corresponds to your chosen anchor point.
• This will set the starting point for your Anchored VWAP calculation.
4. View the Anchored VWAP Line:
• The VWAP line will instantly calculate and appear on your chart, anchored to the selected reference point.
• The line will dynamically adjust based on volume and price movements from the anchor point.
5. Analyze the Anchored VWAP:

• Use the anchored VWAP line as a dynamic support/resistance level.
• Observe how price reacts around these levels.
• Look for potential trend changes or reversals when the price crosses above or below the anchored VWAP line.

Remember that:

• The anchor point is crucial for effective analysis. Choose it carefully based on your trading strategy and the context of the market. 
• You can often customize its appearance (color, line style, etc.).

More Resources:

🔵 TradingView 30 Day Trial
🔵 #1 Trading Journal (TradeZella)
🔵 LuxAlgo Indicators (30 Days Risk Free)
🔵 Bookmap (See Beyond The Candlesticks)
✅ 3 Trading Signals (Free Webinar)

Launch the Anchored VWAP tool in TradingView

Anchored VWAP: How To Use This POWERFUL Indicator (YouTube link)

References

1. The Complete Guide to Anchored VWAP Indicator