How to use the Volume Weighted Average Price indicator ๐
๐ VWAP represents the average price an asset has traded at throughout the day, based on both volume and price. This provides traders with information on what the average transaction price for an asset was during any given day
๐ When the price is above the VWAP, it indicates that buyers are in control, suggesting a potential upward trend and a good opportunity for a long position.
๐ When the price is below the VWAP, it shows that sellers are dominating, hinting at a downward trend and a spot sell or short signal.
VWAP is not only used to determine market direction but also helps in confirming trade setups. If the price is consistently above or below it, this can confirm the strength of a bullish or bearish trend.
ใฝ๏ธ VWAP can also be utilized to spot potential reversal points when the price crosses the VWAP line (marked blue in the picture above).
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