In a trending session, price pulls back to the volume-weighted average price and bounces. VWAP acts as the fair value that trend participants defend.
How to identify it
- Price has been holding on one side of VWAP
- Orderly pullback, not a crash, into VWAP
- Rejection or absorption at the line
Entry
Enter on the first rejection candle at VWAP in the trend direction.
Stop loss
A few ticks through VWAP or beyond the pullback swing.
Target
The session high/low, then extension.
Invalidation
A sustained close on the other side of VWAP.
Does it work for you?
Textbook reliability means little until you know your own numbers. Tag your vwap pullback trades in TradeZento and it shows your win rate, average win and loss, and P&L per trade for this pattern, so you know whether to keep it in your playbook.