VWAP Strategy Guide

VWAP — the volume-weighted average price — is the average price paid for a stock so far today, weighted by volume. Institutions benchmark their executions against it, which is why it acts as intraday support and resistance far more often than random lines on a chart.

A VWAP hold setup happens when a stock pulls back to VWAP and buyers step in, defending the level with a clear stop just beneath it. A VWAP reclaim is the mirror image: a stock that was weak below VWAP pushes back above it with volume, often triggering a momentum shift as shorts cover.

Losing VWAP with expanding volume is a warning sign — momentum has shifted to the sellers. Many traders use VWAP as a hard line in the sand: above it they look for longs, below it they stand aside or look for short setups. Like every indicator, it works best when combined with price action and volume, not in isolation.