How do I read VWAP? Is it where the price should be?

Question

Accepted Answer

No. VWAP is the average price every share traded at today, weighted by volume, and it starts over each morning. It is not a target or a fair price: it shows who has been in control. Price under VWAP means most of today's buyers are holding at a loss; price above it means most are in profit. What it is: the day's average price, weighted by how many shares traded at each price. It resets at each day's open. Not a target: a VWAP above the close does not mean the stock "should" be at the VWAP. It means the average buyer today paid more than where the stock finished. Under VWAP: sellers had the upper hand that day. VWAP often acts as a ceiling on the way back up. Over VWAP: buyers had the upper hand. VWAP often acts as a floor on a pullback. Best on intraday charts: it is a one-day line, so read it on the 5-minute to 1-hour charts. Add it with ƒx (computer) or Indicators (phone), or the VWAP + 9/21 EMA combo (the classic indicators). It is a reading of the day, not a buy or sell signal.