What is anchored VWAP?

Regular session VWAP resets at every open, so it only tells you about today. On a daily chart it is useless, as the VWAP trading strategy lesson explains. Anchored VWAP removes the reset: the running total starts at the anchor bar and keeps going for as long as the line stays on the chart, for days, weeks or months.

That turns VWAP into a swing-trading tool. Each anchor asks a specific question: what have buyers paid on average since the earnings report? Since the March low? Since the all-time high? The answer is a level many participants are watching, because it marks where the group that traded since the event moves from profit to loss.

Anchored VWAP (AVWAP)
A volume-weighted average price calculated from a chosen starting bar, the anchor, instead of from the start of each session.
Anchor
The bar where the calculation starts, usually a significant event such as an earnings gap, a major low or high, or the first bar of a year.
Typical price
The high plus the low plus the close of a bar, divided by 3. It is the default price used in the VWAP calculation on TradingView.

How is anchored VWAP calculated? A worked example

The formula is the same as session VWAP, only the start changes: anchored VWAP = cumulative (typical price × volume) ÷ cumulative volume, summed from the anchor bar to the current bar.

Hypothetical: a stock gaps up on earnings. On the gap day the high is $54, the low $50 and the close $52, so the typical price is $52.00, on 3 million shares. Day 2 has a typical price of $54.00 on 1 million shares; day 3, $53.00 on 1 million. After day 1, the AVWAP is $52.00. After day 2, (156 + 54) ÷ 4 = $52.50 (in millions). After day 3, (210 + 53) ÷ 5 = $52.60. A plain average of the three typical prices would be $53.00; the AVWAP sits lower because the heavy gap day carries the most weight.

Read it this way: the average share traded since the report changed hands near $52.60. If the stock later falls back to that level, the buyers since the gap are at breakeven on average, which is why the line often attracts a reaction.

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A table under the formula anchored VWAP = Σ (typical × volume) ÷ Σ volume, from the anchor bar, with typical price = (high + low + close) ÷ 3. Bar 1, the anchor (highlighted): typical 52.00, volume 3.0M, Σ TP × vol 156.0M, Σ volume 3.0M, AVWAP 52.00. Bar 2: 54.00, 1.0M, 210.0M, 4.0M, 52.50. Bar 3: 53.00, 1.0M, 263.0M, 5.0M, 52.60. Below, the plain average of the three, 53.00, beside the anchored VWAP, 52.60, with the note: the heavy anchor day weighs the most.

Where to anchor it: the anchors that matter

An anchor is only useful if the bar marks a real change in who is in control. Random anchors give random lines. The common choices:

  • Earnings gaps and other big news days: the line tracks the average buyer since the market repriced the stock. See gap trading strategy and earnings season.
  • A major swing low: the average cost of everyone who bought since the bottom. While price holds above it, the move off the low is intact.
  • A major swing high or all-time high: the average buyer since the top. Below it, those buyers are at a loss, so rallies into the line often meet sellers who want out at breakeven.
  • The start of the year or quarter: the average buyer of the period, a quick read on whether the year is working for the stock.
  • An IPO day: the average price paid since the stock began trading, see what is an IPO.
  • A breakout day on heavy volume: the average buyer since the stock cleared its base.

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Four small charts, each with an orange anchored VWAP starting at a marked anchor bar with heavy volume. Earnings gap: the line starts at the gap bar and runs under price; note: support while price holds above. Swing low: the line starts at the low and rises under the recovery; note: the average buyer since the low. Swing high: the line starts at the top and stays above the falling price; note in red: resistance: buyers since the top are underwater. Start of the year: a dashed separator marked Jan and a line from the first bar of the year; note: is the year’s average buyer ahead?

How to read anchored VWAP: support, resistance and the average buyer

Above the line, the average participant since the anchor is in profit. Pullbacks toward it are often bought, because holders defend their gains and buyers who missed the move see a fair price. A rising line under a rising price describes an uptrend in plain numbers.

Below the line, the average participant is at a loss. Rallies up to it often stall, because trapped buyers sell to get out near breakeven. When price finally closes back above an AVWAP from a major high, the buyers since the top are back to even, and that overhead supply has been absorbed.

Two lines can frame the picture: one from the last major low and one from the last major high. Price squeezed between them shows that neither group is clearly in control yet, and a decisive close outside the pair often starts the next move. Treat every line as a zone rather than an exact price, and it is clearer when it lines up with other levels, as in the support and resistance strategy or a high-volume node from the volume profile.

Step by step: a daily anchored VWAP pullback setup

The most common setup is a pullback to an AVWAP in an uptrend, on a daily chart. Hypothetical: after an earnings gap, a stock climbs to a high of $58.00 and then pulls back. The AVWAP from the gap day has risen to about $54.00. One daily candle dips to $53.70, below the line, and closes back above it at $54.40.

You buy at $54.40 with a stop at $53.40, under the low of the dip, so the risk is $1.00 a share. The target is the prior high at $58.00, $3.60 away, or 3.6 times the risk. With a $25,000 account and 1% risk per trade, the risk is $250, so the position is $250 ÷ $1.00 = 250 shares; the position size calculator does this for you. The steps:

  1. Pick the anchor before you look for a trade: the event that changed the stock, here the earnings gap.
  2. Confirm the trend: price has held above a rising AVWAP since the anchor.
  3. Wait for the pullback to reach the line, ideally on lighter volume than the move up.
  4. Trigger: a daily candle that closes back above the line. A wick through it alone proves little.
  5. Stop: under the low of the pullback, so a close well below the line ends the idea.
  6. Target: the prior high, or the next resistance level above.
  7. Size from the stop so the loss, if the stop is hit, is a planned 0.5–1% of the account.

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A hypothetical daily pullback: a prior high at 58.00, then a pullback to an orange anchored VWAP rising slowly toward 54.00, and a candle whose lower wick reaches 53.70 and closes at 54.40, with a buy triangle. Price tags mark the target at 58.00 (green dashed), the entry at 54.40 and the stop at 53.40 (red dashed). A card: risk 54.40 − 53.40 = 1.00, reward 58.00 − 54.40 = 3.60, 3.6R, risk 1% of the account: 25,000 × 1% = 250, 250 ÷ 1.00 = 250 shares.

How to add anchored VWAP in TradingView

Anchored VWAP is a built-in drawing tool on TradingView and is free on every plan. The built-in VWAP indicator can also anchor itself to periods such as a week, a month or each earnings report through its Anchor Period setting.

  1. Open a daily chart of a liquid stock or ETF.
  2. Find Anchored VWAP among the drawing tools on the left toolbar; you can add it to your favorites for quick access.
  3. Click the anchor bar, for example the earnings gap day. The line is calculated from that bar to the last bar on the chart.
  4. Open the drawing’s settings to check the source (hlc3, the typical price, by default) and set the color and width of the line.
  5. To move the anchor, drag the starting point to another bar. Note the event in your trading journal so you anchor consistently.

Common anchored VWAP mistakes

The tool is simple; these habits make it misleading:

  • Anchoring to random bars, or moving the anchor until the line fits past price action.
  • Drawing too many lines. Two or three from real events are plenty.
  • Treating the line as an exact price. Price often overshoots it by a little, so use a closing basis and a stop beyond the zone.
  • Using it on thinly traded stocks, where a few trades can move both price and the line.
  • Trading against the slope: buying at a falling AVWAP from a major high is buying into supply.
  • Forgetting the bigger picture: an AVWAP pullback in a broken trend is not the same trade as one in a healthy swing trading uptrend.

Does UpTickFlow use anchored VWAP?

No. UpTickFlow, our invite-only TradingView indicator, does not draw or read VWAP, anchored or not, and none of its signals is a VWAP setup. Its buy signals, harmonic and dip, run on 1-hour charts and up, and each comes with an entry, a stop and two targets drawn on the chart. You can keep an Anchored VWAP drawing on the same chart.

So where you anchor, and whether price respects the line, stays your judgment. The indicator gives you a plan; it cannot make a trade work. Details are on the pricing page.