Anchored VWAP
Original schematic showing the guide's principal visual relationships.
Anchored VWAP = cumulative sum(Price × Volume) ÷ cumulative Volume from the selected anchor.
Formula and components
A volume-weighted average price calculated from a chosen event or pivot instead of the session open.
Anchored VWAP = cumulative sum(Price × Volume) ÷ cumulative Volume from the selected anchor.
How it works
The indicator transforms price, range, or volume observations over a selected lookback. Shorter settings react faster but create more noise; longer settings respond more slowly and emphasize the underlying regime. Always compare the reading with price structure and timeframe.
How to read it
It estimates the average participant cost since earnings, a breakout, a major low, or another defensible anchor.
Practical example
Anchor VWAP to an earnings gap or major low, then monitor whether later pullbacks hold above the average participant cost since that event. Testing several anchors after the fact introduces hindsight bias.
Confirmation checklist
Confirm that participation supports the price move and compare like-for-like sessions. One unusual print or event-driven spike should not define the entire signal.
Limitations and false signals
Anchor selection is subjective; choosing the event after seeing the result creates hindsight bias.
Limitations and false signals
Frequently asked questions
What does this pattern or indicator describe?
A volume-weighted average price calculated from a chosen event or pivot instead of the session open.
How should the signal be confirmed?
It estimates the average participant cost since earnings, a breakout, a major low, or another defensible anchor. Confirm that participation supports the price move and compare like-for-like sessions. One unusual print or event-driven spike should not define the entire signal.
What can cause a false signal?
Anchor selection is subjective; choosing the event after seeing the result creates hindsight bias.