The volume-weighted average cost (VWAP; ruby work above) is an first-class reference signal inward gain saltation markets. In a adept gain trade, we'll tend to run across a narrow value surface area (volume volition endure transacted inside a narrow cost band) together with moves away from value volition tend to provide dorsum to (and commonly through) VWAP. In a truthful gain trade, we'll likewise run across petty gradient to VWAP, every bit nosotros transact book relatively evenly inward a higher house together with below that average price.
If you're playing for a gain breakout, it oft makes feel to rails the distribution of NYSE TICK, Cumulative Delta, together with intermarket themes. Often we'll run across buying or selling unable to pierce VWAP prior to a breakout to the downside or upside. It's the inability of cost to merchandise through VWAP that shows buying or selling drying up--and that emboldens traders to probe lower or higher value levels.
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