Anchored VWAP+

The Anchored VWAP+ indicator is a comprehensive tool designed to provide deep insight into market valuation by calculating the Anchored Volume-Weighted Average Price, Anchored Average Price, and Anchored Average Cost from a user-defined starting point. It helps traders identify potential support and resistance zones based on different mathematical weightings of price and volume.

Usage

The tool is primarily used by selecting a significant market event—such as a trend reversal, earnings report, or price gap—to serve as the calculation anchor. Once the starting point is selected, the script plots three distinct lines that provide different perspectives on market cost basis:

• Anchored VWAP (Volume-Weighted Average Price): The standard metric that weights price by volume, representing the true average cost at which all shares were traded since the anchor.
• Anchored AP (Average Price): A calculation that removes the volume component, providing a simple arithmetic average of price over time. This helps in identifying if price action is deviating significantly from its mathematical mean regardless of volume.
• Anchored AC (Average Cost): This harmonic mean calculation provides an alternative view of market cost, often reacting differently to price volatility than standard averages.

Traders can use the area between the VWAP and the AP (represented by a shaded background) as a dynamic support or resistance band. When price interacts with these lines, it often signals areas of high interest where the market may find equilibrium or reverse.

Details

The indicator calculates three distinct metrics starting from the user's chosen startTime:

1. AP (Average Price): Calculated by taking the cumulative sum of the bar's average price (OHLC4) divided by the number of bars elapsed since the anchor point.
2. VWAP: Calculated by taking the cumulative sum of (Price × Volume) divided by the cumulative volume since the anchor point.
3. AC (Average Cost): Derived from the reciprocal of prices, calculated as the elapsed bar count divided by the cumulative sum of (1 / Price).

The script also includes built-in alert conditions for price crossing the VWAP or the Average Price crossing the VWAP, facilitating automated monitoring of trend shifts.

Settings

• Start Time: Determines the specific point on the chart where the calculations begin. Users are prompted to select this point manually upon loading the script.
• Color of the Anchored Average Price: Customizes the visual appearance of the AP line.
• Color of the Anchored VWAP: Customizes the visual appearance of the VWAP line.
• Color of the Anchored Average Cost: Customizes the visual appearance of the AC line.
• Color between Average Price and VWAP: Adjusts the color and transparency of the shaded support/resistance band.

FAQ

How do I use the anchor point?

When you add the indicator to your chart, it will prompt you to click on a specific candle. This candle becomes the "anchor" from which all calculations start. You can change this point later in the settings by modifying the "Start Time".

What does the shaded area represent?

The shaded area represents the spread between the Volume-Weighted Average Price and the simple Average Price. This zone acts as a dynamic band of potential support or resistance.

How can I access Anchored VWAP+?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.