Technical analysis by Risk_Adj_Return about Symbol BTC on 6/5/2025

1️⃣ What Is VWAP (Volume Weighted Average Price)?VWAP stands for Volume Weighted Average Price. It's a tool that shows the average price an asset has traded at throughout the day, adjusted for volume. That means it gives more weight to prices with high trading volume.✅ It helps traders and investors see if the current price is above or below the average price paid.✅ It’s often used by institutional traders, such as mutual funds and pension funds, to enter and exit positions without causing major price moves.VWAP = (Sum of Price * Volume) / Total Volume2️⃣ Why VWAP MattersI (Traders) often use VWAP as a dynamic support or resistance zone.- Price below VWAP: considered undervalued by some 👉 may act as support- Price above VWAP: considered overvalued 👉 may act as resistanceIt acts like a magnet for price, especially in trending markets. VWAP is also used as a benchmark for large players want to buy below VWAP or sell above it.3️⃣ Anchored VWAP (AVWAP)Anchored VWAP is a more advanced version of VWAP. Instead of starting at the market open, you anchor it to a specific candle (pivot high or low).🔍 Why use it:- Lets you analyze the average price from key market turning points- Helps spot institutional interest near pivots- More accurate for swing tradingWhen you anchor VWAP to a major high or low, it gives you clean zones where smart money might enter or exit.4️⃣ How I Use Anchored VWAPI personally anchor VWAP from:- Major pivot highs/lows- Breakout points- Strong reversal candlesThen I watch how price interacts with it.✅ Works well on 30m and 4H charts for intraday or swing setups✅ Can be combined with fixed range volume profile for extra confluenceIf you haven’t read my guide on fixed range volume profile, scroll below — it’s linked there.5️⃣ Common Uses✔️ Support and resistance zone in trending markets✔️ Institutional entry/exit level benchmark✔️ Reversion-to-mean setupsVWAP is used across timeframes. I use higher timeframes like 4H to spot trend zones, then zoom into 30m or 15m for entries.Setting and more informationVWAP Explained by TradingView: tradingview.com/support/solutions/43000502018-volume-weighted-average-price-vwap/Anchored VWAP Explained by TradingView: tradingview.com/support/solutions/43000669764-anchored-vwap/6️⃣ VWAP Limitations⚠️ VWAP doesn’t work well in all cases:- In sideways/choppy markets, it can lose value- It is not an exact entry/exit signal, but rather a dynamic zone- In FX markets, it’s unreliable due to lack of centralized volume dataAlso, treat VWAP as a zone, not a line. Large players fill big orders in that area, expect false moves or liquidity grabs.7️⃣ Mistakes to Avoid❌ Entering blindly on VWAP touches❌ Using VWAP without confirmation from price action or volume❌ Assuming it always gives perfect levelsIt works best when combined with other tools, such as market structure, support/resistance, and volume profile.8️⃣ Final ThoughtsVWAP is a powerful tool to see where price is relative to volume-based value. Anchoring VWAP to key levels adds precision and insight.Used properly, it helps:- Spot where institutions might be active- Confirm high-probability zones- Improve entries/exits when paired with other toolsExamples are provided below to show how VWAP works in real-time setups. This guide is educational and for learning purposes only.VWAP Zone and a Example trade BTCExample Stock Market AAPLExample Resistance MSTRVWAP (Volume Weighted Average Price) helps traders see the average price weighted by volume. It's commonly used by institutions to identify good entry/exit zones. Anchored VWAP takes this further by starting from key points like pivot highs/lows for more accuracy. It's most useful in trending markets and works best when combined with tools like fixed range volume profile or support/resistance. While powerful, VWAP isn’t perfect it should be used as a dynamic zone, not a fixed level, and always with other confirmations.Disclaimer: This is not financial advice. Always do your own research. This content may include enhancements made using AI.