What Is VWAP Bounce?
A VWAP bounce strategy treats the Volume Weighted Average Price as dynamic intraday support in an uptrend (or resistance in a downtrend). When price pulls back to VWAP and shows signs of bouncing — a hammer candle, volume spike, or break of the prior bar's high — the trader enters in the trend direction.
VWAP works as a level because many institutional traders use it as their execution benchmark. Buyers want to fill below VWAP; sellers want to fill above. This collective behavior creates real support and resistance around the VWAP line.
The strategy works in trending intraday sessions and fails in choppy ones. Standard execution: enter on bounce confirmation, stop just below VWAP (or below the bounce low), target the day's high or a 1.5-2x risk multiple. Best used on liquid stocks during the morning session when intraday trends are clearest.
Related terms
- VWAP (Volume Weighted Average Price) — Intraday average price weighted by volume — institutional benchmark for execution quality.
- Support and Resistance — Price levels where buying or selling pressure historically halts price movement.
- Volume
- Momentum Trading — Strategy buying assets that have risen recently, betting the trend continues.