Understanding Anchored VWAP:
A Trader’s Guide to Anchoring Technical Analysis

Welcome! This is a deep dive into anchored VWAP—a tool that’s reshaped how many professionals read market structure. If you’ve ever wondered how seasoned traders “anchor” their analysis to real market events (rather than arbitrary points on a chart), you’re in the right place.

This guide is designed for anyone curious about how meaningful data points—like the first trade of the year or a major swing low—can clarify the true market landscape. Anchored VWAP isn’t just another indicator; it’s a lens for understanding where the real buyers and sellers are participating, and how price interacts with those key levels.

Anchored VWAP: What It Is and Why It’s Useful

VWAP (Volume Weighted Average Price) shows the average price at which a market has traded throughout a period, weighted by volume. Unlike a standard VWAP, which resets each day, anchored VWAP lets you choose any starting point—such as a news event or the new year—and track the average price from there.

“What I love about anchored VWAP is that it lets you see where buyers or sellers have an average cost basis after big events—earning reports, FOMC decisions, or just the first trade of the year.”

This method allows for analysis rooted in market psychology and crowd positioning, not just price patterns.

Why the First Trade of the Year Matters

The first trade in S&P 500 futures (ES) each calendar year sets a new baseline—a true anchor point. This isn’t arbitrary: big money often starts positioning here, and the average price from this moment forward becomes a reference for all subsequent market activity.

• Baseline for the Year: Every participant entering later is, knowingly or not, referencing this anchor.
• Market Context: Trends, reversals, and pullbacks all relate to this average cost.

Selecting Time Frames Early in the Year

Early in the trading year, data is scarce. That’s why it pays to start on shorter timeframes—like 1-minute charts—then gradually move up as more price action unfolds. This adaptive approach ensures your analysis is always grounded in relevant market context.

Spotting Resistance and Support With Anchored VWAP

As the market evolves, anchored VWAP levels begin to reveal actual resistance and support. For example, after the first trades of the year, sellers often exert control, capping price advances at the year-to-date anchored VWAP. This is a live demonstration of how crowd psychology interacts with technical levels.

Transition Points: When Resistance Becomes Support

Price doesn’t remain trapped forever. When it decisively moves above an anchored VWAP, the market dynamic shifts: sellers may get squeezed, while buyers establish conviction at a new “line in the sand.” These transitions speak to the real-time handoff between supply and demand.

“What was once prior resistance now seems to have become support.”

Refining Your Anchors: Watching Market Reaction

As new lows or highs form, anchoring VWAP to these points can provide fresh insight. The key isn’t to blindly buy every touch, but to treat these levels as “areas of interest”—zones where price reaction can reveal the next move.

The Weekly Anchor: Sunday Evening S&P 500 Futures

Beyond the annual anchor, each week’s opening trade (typically Sunday night for futures) is another opportunity to reset your perspective. This weekly anchor can highlight who’s in control—buyers or sellers—as fresh liquidity comes in ahead of the equity open.

The Handoff: Identifying New Momentum Campaigns

Markets move in campaigns, with momentum passing from one group to another. Spotting sharp reversals and anchoring the VWAP at those inflection points helps to identify when a new trend is truly underway.

When to Remove an Anchor

Too many anchors can clutter your charts and your thinking. The best practice is to keep only those levels that are currently relevant, removing outdated references as new data emerges. Clean charts = clear decisions.

Short-Term Tactics: Combining Time Frames

Effective analysis blends the big picture (year-to-date and weekly anchors) with short-term evidence (like 1-minute price action) near those levels. This dual perspective helps filter out noise and focus on meaningful opportunities.

Levels of Interest: Recognizing Supply and Demand

Anchored VWAP helps identify zones where supply and demand are most concentrated—places where many market participants are likely to act. Clusters of anchors often signal high-confidence zones for both support and resistance.

Planning Scenarios in Advance

Success in trading isn’t about predicting the future, but about preparing for possible outcomes. Outlining scenarios in advance—such as how price might react at key anchored VWAPs—lets you respond with clarity, not emotion.

Example Scenario: Outlining the Move

For instance, if price rallies into a resistance anchor, you might expect a pullback. If buyers show up and defend a support anchor, that could signal renewed strength. Mapping these possibilities grounds your decisions in logic rather than hope.

Let the Market Lead: Managing Stops and Re-Entries

Markets are dynamic—sometimes your analysis will be proven right, sometimes not. The anchored VWAP approach encourages flexibility: exit quickly if a level fails, and re-enter only when new evidence supports your thesis.

Further Learning: Resources and Next Steps

Anchored VWAP is a robust framework for understanding price action in any liquid market. For those seeking deeper insight, there’s a world of material—books, real-world examples, and communities sharing analysis—dedicated to refining these techniques.

• Keep charts clean: Remove anchors that aren’t relevant to the current market action.
• Use color coding: Assign colors to different anchors so you can quickly spot areas of interest.
• Be patient: Wait for supporting evidence, not just a touch of the anchor.
• Scenario building: Map out a few likely price behaviors before each session.

“These aren’t predictions. This is how I look at the market and try to anticipate what its movement will be.”

Sample Chart Flow: The Anchored VWAP Playbook

A typical anchored VWAP workflow might include:

• Year’s First Trade: Sets the stage for all further analysis.
• Year-To-Date Low: Reference for potential new buyer control.
• Weekly Sunday Night Open: Tracks the week’s battle for control.
• Handoff Points: Focuses attention on game-changing reversals.
• Keep it clean: Remove obsolete anchors to maintain focus.

Anchored VWAP Q&A

Q: Should I always trade right at the anchored VWAP?
A: Not necessarily. It’s a zone for observation—a place to look for evidence, not a mechanical signal.

Q: What if price slices through my anchor?
A: Don’t hold and hope. Let the market tell you if the level remains important.

Q: How do I pick which swing highs/lows to anchor from?
A: Focus on meaningful pivots—major highs/lows, big news, or strong reversals.

Q: Can I use this in stocks, not just S&P 500 futures?
A: Absolutely. Anchored VWAP works in any liquid market.

Q: Where can I learn more or see examples?
A: There’s a thriving online community sharing anchored VWAP analysis and insights across social platforms and publications.

One Last Thought

“We’re in a primary uptrend on the longer-term timeframes—it’s the buyers’ game to lose.”

This article is based on real S&P 500 futures action and practical trading experience. Use what fits your process, and stay adaptive as markets evolve.