VWAP Bounce ā A Simple Yet Powerful Trading Setup
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1. Introduction
The VWAP bounce strategy focuses on trades where price retraces to VWAP and finds support/resistance before continuing the trend.
2. Understanding VWAP
VWAP is calculated by taking the cumulative traded value (price Ć volume) and dividing it by cumulative volume.
3. Identifying a VWAP Bounce
- āļø Price pulls back to VWAP in an uptrend ā potential continuation
- āļø Bearish rejection at VWAP in a downtrend ā possible short trade
4. Trading VWAP Bounces
Look for bullish candlestick patterns near VWAP (e.g., engulfing) as confirmation for entry.
Final Tip: VWAP bounce setups work best with EMA and risk management strategies.