Trading term
What is Anchored VWAP?
Anchored VWAP is a volume-weighted average price that starts from one candle you choose, rather than resetting at the start of each session. You anchor it to a meaningful event — an earnings gap, a major low, a breakout — and it tracks the average price everyone has paid since.
Ordinary VWAP restarts every session, which makes it a day-trading tool and nothing more. Anchored VWAP removes that limitation: you pick the starting candle yourself, and the calculation runs forward from there, weighting every price by the volume traded at it. The resulting line answers a specific question — what is the average price paid by everyone who has transacted since that event?
That framing is why the anchor choice matters more than any setting. Anchor to an earnings gap and the line shows the average cost of everyone who bought the new information. Anchor to a major swing low and it shows the average entry of the buyers who started the move. When price trades above the line, that cohort is collectively in profit; below it, collectively underwater — which is a plausible reason the line often acts as support or resistance on the first few tests.
The tool was popularised by Brian Shannon, and its appeal is that it needs no period setting to argue about. There is no 14 versus 20; there is only which event you consider significant, which is a judgement about the market rather than a parameter.
A VWAP anchored to the earnings gap tracks the average price paid by everyone who bought the news. Price returns to that line twice and holds it both times.
For example
A stock gaps up on earnings from $80 to $92. You anchor a VWAP to the gap candle. Over the next six weeks price pulls back twice, touches the anchored line near $95 both times, and bounces — the average earnings buyer is breaking even there, and that's where demand keeps appearing.
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That's Anchored VWAP in theory — it clicks when you read it on a live chart. Practise it hands-on in the TradeWize Premium Technical Analysis track.
Explore Premium →Why it matters to you
Most indicators tell you something about price alone. Anchored VWAP tells you about positioning — roughly what a specific group of participants paid, and therefore whether they're currently winning or losing. That makes it unusually good for finding levels that matter to real money rather than levels that merely look neat on a chart, and it gives you a non-arbitrary place to define risk.
⚠ A badly chosen anchor produces a meaningless line
Because you pick the starting point, it is trivially easy to hunt for an anchor that makes the line touch whatever you already believed. Anchor to a random mid-trend candle and the output is arithmetic without meaning. Choose the anchor from an objectively significant event — a gap, an earnings date, the highest-volume candle, a major high or low — before you look at where the line lands.