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VWAP rejection

🧭 1. What VWAP Represents​

VWAP = Volume Weighted Average Price → It’s the average price at which most of the day’s volume has traded.

So when price is below VWAP, the majority of traders who went long earlier in the session are underwater.

  • If price rallies back up to VWAP, those losing longs suddenly see a chance to break even.
  • They often sell there, creating supply.

That’s why VWAP acts like dynamic resistance in a downtrend — it’s the “pain relief line.”

⚙️ 2. What Happens During a VWAP Rejection​

When price tags VWAP:

  1. Early longs close at breakeven → supply pressure.
  2. Shorts re-enter → additional selling.
  3. Momentum stalls → rejection candle forms.

The result? A local top with high probability of continuation lower — as long as VWAP holds.

📊 3. Why It’s Reliable​

  • VWAP combines price and volume, so it’s not just a moving average — it reflects real positioning weight.
  • A rejection from VWAP confirms that the average cost basis of traders is still higher than the current price — meaning sentiment remains bearish.
  • When price finally breaks above VWAP and holds, that’s when the intraday regime flips bullish — longs start buying dips instead of selling rallies.

🧩 4. The Psychology in a Sentence​

A VWAP rejection is basically the market saying: “All those longs who were down just got a chance to get out — and they took it.”

Building something custom​

  • VWAP can only get so far from price
  • VWAP tends to be:
    • above price during downtrends
    • below prive during uptrends
    • cross/touch alot during range bound
  • These insights are based on a visual analysis of the 5m SOL-PERP