VWMA is a moving average that weights prices by volume, placing greater emphasis on price levels where significant volume traded. Unlike simple moving averages, VWMA reflects where buying and selling interest was strongest.
Key Use: Identify true price support/resistance and smooth trend lines with volume confirmation.
VWMA = Σ(Close × Volume) / Σ(Volume)
For a specified period (typically 20, 50, or 200 periods)
Simple MA
All prices equal weight, regardless of volume.
VWMA
Prices weighted by volume - reflects true interest.
Support/Resistance Levels
Identifies areas where institutional volume accumulates.
Trend Filters
Use as trend confirmation - price above VWMA = uptrend.
Entry/Exit Points
Pullbacks to VWMA offer volume-weighted entries.
✓ Advantages
⚠ Limitations