The Anchored VWAP indicator ties VWAP calculations to a specific price bar chosen by the user.
Like the traditional VWAP, it incorporates price and volume in a weighted average and can be used to identify areas of support and resistance on the chart. However, traditional VWAP calculations always start with the first bar of the day and end with the final bar of the day.
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In some situations, a user would prefer to analyse the VWAP line based on a less arbitrary starting point, and be able to extend that VWAP line beyond the end of the trading day. Anchored VWAP allows you to specify the price bar where calculations begin, making it easy to see whether the bulls or bears have been in charge since a very specific point in time. The starting price bar that is chosen generally marks a shift in market psychology, such as a significant swing high or low, earnings, news, or other announcements.
The Anchored VWAP line is charted using price and volume data from that significant event onward.
