Anchored VWAP
Standard VWAP resets every morning. Anchored VWAP lets you start the calculation from any point — a major news event, an earnings release, a swing low — and track the volume-weighted average price from that anchor forward. It has become one of the most popular tools among professional Indian traders for multi-day reference levels.
Key takeaways:
- Anchored VWAP starts from a chosen bar instead of the daily open.
- It captures the average price weighted by volume from a meaningful event.
- Common anchors include earnings dates, IPO listing days, and swing highs/lows.
- Acts as a dynamic support/resistance line; bullish above, bearish below.
- Best used on liquid instruments where volume data is reliable.
Why anchored VWAP matters
Markets often pivot around significant events. Quarterly earnings, RBI announcements, sector news — these create a reference price that traders “remember” long after the event. Anchored VWAP encodes that memory mathematically. If a stock has been trading above the anchored VWAP from its last earnings beat, the buyers from that day are still in profit on average — a bullish backdrop.
How to set the anchor
- Right-click on a key candle in your charting platform and select Anchored VWAP.
- Choose the candle of the event — earnings, news, swing reference.
- The platform draws a curved line forward representing volume-weighted price since the anchor.
Using anchored VWAP in trades
- Trend continuation: Buy pullbacks to anchored VWAP in an uptrend.
- Failed breakouts: Watch for prices reclaiming an anchored VWAP after a brief breakdown.
- Earnings setups: Anchor at last earnings; if a stock is far above this line, it is in a strong post-earnings uptrend.
- IPO reference: Anchor at IPO listing; price holding above the anchored VWAP suggests new shareholders are net profitable.
Anchored VWAP vs standard VWAP
| Standard VWAP | Anchored VWAP | |
|---|---|---|
| Reset | Every day | From the chosen bar |
| Time horizon | Intraday only | Multi-day or multi-week |
| Used by | Day traders | Swing and positional traders |
Anchors commonly used by Indian traders
- Date of last earnings or guidance update.
- Day of a major sectoral news event (e.g., RBI rate decision day for banking stocks).
- 52-week high or low pivot.
- Block deal day or significant promoter transaction.
- Initial trading day for IPOs and new listings.
Limitations
Anchored VWAP needs accurate volume data. On illiquid scrips, the line can mislead. Multiple anchored VWAPs on the same chart can clutter analysis — keep only the relevant two or three to avoid paralysis. Combine with trend tools rather than treating the line as a magic level.
Frequently asked questions
Can I set multiple anchors on one chart?
Yes — many platforms support several anchored VWAPs simultaneously. Use sparingly.
Is anchored VWAP useful for long-term investing?
Yes — anchor at major lows (e.g., March 2020 Covid bottom) to track the average buyer’s position.
Does Lemonn support anchored VWAP?
Yes. It is available in the indicator menu of the Lemonn chart.
Can I anchor on a future bar?
No — anchors must be from past data. The line calculates forward from the anchor.
