VWAP 20

VWAP 20 (Volume-Weighted Average Price) uses price and volume over 20 periods. It gives a fair-value style average price.

The calculation:

VWAP = Cumulative (Typical Price × Volume) / Cumulative Volume
Typical Price = (High + Low + Close) / 3

Why VWAP matters:

• Volume integration: Weights prices by trading activity
• Fair value benchmark: Shows average price paid by market participants
• Institutional reference: Widely used by institutions to assess execution quality
• Support/resistance: Acts as dynamic support in uptrends, resistance in downtrends

Trading applications:

• Trend bias: Price above VWAP indicates bullish intraday bias
• Entry/exit timing: Institutions often aim to execute at or below VWAP
• Pullback entries: Pullbacks to VWAP in trends can offer entry points
• Reversal levels: Strong reactions from VWAP may indicate reversals

20-period VWAP considerations:

• Multi-day view: Extends traditional single-session VWAP concept
• Trend filter: Useful for identifying medium-term direction
• Less noise: Longer period smooths out intraday fluctuations

VWAP is particularly valuable because it combines price and volume, providing a more complete picture of where the market has truly transacted.