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Technical Analysis
VWAP
Definition
Volume Weighted Average Price. The average price weighted by volume, used as a benchmark for fair value throughout the day.
Why It Matters
Institutional traders use VWAP to gauge if they're getting a good price. A stock above VWAP is trading at a premium to the day's average; below VWAP it's at a discount. VWAP often acts as support or resistance.
Real Example
A stock opens at $10, drops to $9 on low volume, then rallies to $11 on high volume. VWAP might be around $10.20. Traders watching VWAP would see $10.20 as a pivot — price above it is bullish, below it is bearish.