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11 jam yang lalu

VWAP Standard Deviation as Support (VWAP Bands)

VWAP (Volume Weighted Average Price) is a widely used technical indicator, and traders often use VWAP standard deviation bands as dynamic support and resistance levels. These bands are similar to Bollinger Bands but are derived from VWAP.

How It Works:
1. VWAP Calculation:

VWAP = \frac{\sum (Price \times Volume)}{\sum Volume}

This gives a running average price weighted by volume.
2. Standard Deviation Bands:
• Just like Bollinger Bands, you can add standard deviations around VWAP.
• The bands are calculated as:

Upper Band = VWAP + (n \times \sigma)


Lower Band = VWAP - (n \times \sigma)

Where \sigma is the standard deviation of price over a certain period.

Using VWAP Standard Deviation as Support
• The lower VWAP bands (e.g., VWAP - 1σ, VWAP - 2σ) often act as support in an uptrend.
• When the price reaches the lower band, it may indicate a buying opportunity if it holds.
• If price breaks below the lower band with strong volume, it may signal further downside movement.