The Importance of VWAP

How VWAP worked on SPY today                                                                                                                                                                                                                                                                                                                                                                                                                 August 05, 2024 | [Read Online]( The Importance of VWAP How VWAP worked on SPY today *sponsored by Good afternoon gang, welcome to the bloodbath part 2 from Friday’s sell off. Not sure if you all know this or not but we use VWAP all the time in my morning [Market Navigator service]( so I thought I’d break it down for you. Simply put, VWAP starts for Volume Weighted Average Price or essentially the average price the entity you’re watching trades at. For me, when the SPY price is above VWAP it’s bullish and if we drop below it’s more bearish. Or, “calls” when SPY is trading above VWAP and “puts” when SPY falls below. Today we saw SPY pullback and BOUNCE right off the VWAP line, I did a live example in the screenshot below. As you can see I highlighted the yellow VWAP line showing the price action coming down to this level. [In the chat room](I spoke about how this could become support if we hold or a key break DOWN if we go below. Clearly this is something we have to watch and react to. Well, shortly after SPY pulled back to VWAP which was around $515 at the time, price action on SPY spring boarded back up to $520s! A perfect VWAP line bounce and a possible “call” trade idea from that level. See the VWAP image 2 below showing what happened after the VWAP line bounce as price action headed into 12:30pm. Since price action was already above the VWAP line, this kept SPY in a very nice bullish pattern. Had it broken below it could have triggered a possible sell off and put idea but remaining above kept SPY bullish in this example. I use this indicator almost every day in [Market Navigator]( and it’s just another example of a great tool you can learn from from the service. If you’re looking for more details about my flagship options trading service then [check it out right here.]( Love to teach you more about options basics if you’re interested in learning. Cheers to your success, *sponsored by The Motley Fool You missed Amazon. You don't have to again. Amazon, once a small online bookstore, grew into a global behemoth, transforming industries along the way. Now, imagine yourself at the forefront of the next revolution: AI. In The Motley Fool's latest report, uncover the parallels between Amazon's early trajectory and the current AI revolution. Experts predict one of these AI companies could surpass Amazon's success with market caps nine times larger. Yep, you read that right. 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