Lesson 3
Read the session around VWAP
Use a defined VWAP anchor and price behaviour to describe flow or chop.
Study time: about 8m
Lesson
VWAP is a volume-weighted average of price over a defined interval. The calculation depends on its anchor, price input and volume feed. A session-reset VWAP and an anchored multi-day VWAP answer different questions. Check those settings before comparing two charts.
Repeated crossings around a flat session VWAP can describe rotation. Sustained movement on one side, with pullbacks holding away from the average, can describe directional flow. Write what “sustained” and “holding” mean on your timeframe; a single cross is not a complete rule.
Volume from a particular venue or provider does not necessarily represent the entire market. Some forex or CFD feeds supply tick activity rather than centralized traded volume. Know the input before assigning meaning to the line. VWAP is an average, not an objective fair value or a price that must be revisited.
Worked example
Consider two completed sequences. In A, five bars alternate above and below VWAP with overlapping ranges. In B, five bars close above it while pullback lows remain higher. The framework describes A as rotational and B as more directional; it does not attach a success rate to either.
Try it in replay
Record your VWAP anchor and volume source. Find one rotational session and one directional session in replay. Use the same observation window and write one condition that would change your description.
Check your reasoning
A useful answer names settings and observable behaviour. “VWAP says buy” omits both. If the feed or anchor is unknown, that part of the analysis remains unresolved.