Hey all,
Been diving deeper into some less common charting techniques lately and wanted to share some thoughts on using anchored Volume Weighted Average Price (VWAP) levels. While standard VWAP is great for intraday analysis, anchoring it to significant historical price points can reveal some surprisingly strong, often overlooked, support and resistance zones.
The idea is simple: instead of just resetting VWAP at the start of each day/week, you anchor it to a specific swing high, swing low, or even a major news event that caused a significant price reaction. Then, you observe how price interacts with the anchored VWAP line and its standard deviation bands.
How I've been using it:
- Anchor to Major Swing Lows: For assets like BTC or ETH, anchoring VWAP to a significant bottoming pattern can highlight a dynamic support level that adjusts over time. If price holds above this anchored VWAP, it often suggests underlying strength. A break below can signal potential further downside.
- Anchor to Major Swing Highs: Conversely, anchoring to a major peak can reveal dynamic resistance. Price struggling to break and hold above this level, especially with increasing volume on the rejections, can be a bearish signal.
- Standard Deviation Bands: The 1st and 2nd standard deviation bands from the anchored VWAP can act as intermediate support/resistance levels. These are particularly useful for identifying potential reversal points or areas where a trend might pause.
I've found this particularly effective on daily and weekly charts for identifying longer-term trend continuation or potential turning points that aren't always obvious with static support/resistance lines or even traditional moving averages. It combines volume data with price action in a unique way.
Has anyone else experimented with anchored VWAP? What are your findings or preferred anchoring points? Curious to hear your experiences and any other advanced charting tricks you're using to spot these hidden levels.