VWAP Balance Zones

17 Okt 2023

VWAP Balance Zones (VBZ) Is based on 3 concepts.

1. Many Traders use VWAP to help determine Price Trends.
   
2. Trends are typically identified by new Highs or new Lows.
   
3. Balanced is found when Supply and Demand are mostly Equal.
   

VBZ tracks the daily, weekly, and monthly highs and lows; Then plots the average (50%) between the VWAP and the respective extremes.

50% VWAP Zones can be considered significant since they attempt to identify the equilibrium between market participants within the current trend, serving as key reference points to consider for decision making.

>While in an uptrend, Buyers may see price falling to the Hi 50% as an attractive value entry for the continuation upwards.
>While ALSO in an uptrend, Sellers may see price falling to the Hi 50% as a change in sentiment with more downwards movement on the way.

Because of these conflicting mindsets, these zones are thought to display areas of balance between buyers and sellers, which can serve as potential decision points throughout the day.


VBZ Draws Zones from the Daily (High/Low/Close) VWAPs and the Day's (High/Low/Close) extremes as seen below.

Technically speaking, an average between vwap and extreme is a single point, to make these into zones I am using multiple sources for vwap and tracking different points of the bar throughout the day (ex. Close VWAP & Daily Highest Close)

Weekly and Monthly are only displaying the Average Price between the VWAP and the (Weekly or Monthly) High/Low.

These hold up as important levels for speculation; however, since most action will be discovered at the daily zones, I am not displaying the zones for the Weekly and Monthly to keep noise to a minimum.

Unique Behaviors:
- Weekly values are hidden on the first day of the week since they are similar to the daily values on the first day of the week.
- Monthly values are hidden in the first week of the month for the same reason.