The VWAP Reversal Strategy: How Smart Traders Catch the Second Move
Most traders get faked out.
The pros? They wait for the second move.
That’s where the VWAP reversal strategy comes in — a simple, powerful method to catch clean intraday trades after the amateurs get shaken out.
In this article, you’ll learn:
- What VWAP actually tells you
- How to spot fakeouts and reversal setups
- How to combine this with binary and stock entries
- Clear rules for entry, stop, and profit
What Is VWAP (and Why Does It Work)?
VWAP = Volume Weighted Average Price
It shows the average price institutions have paid throughout the day, weighted by volume.
Why it matters:
- Institutions use VWAP to measure their execution
- Price above VWAP = bullish sentiment
- Price below VWAP = bearish sentiment
- VWAP tests and rejections give killer entry signals
The Setup: Catching the Second Move
This strategy works best after an opening range breakout fails.
✅ Long Setup:
- Stock or asset spikes above VWAP at open
- Gets rejected and dips below VWAP
- Price retests VWAP and reclaims it with volume
- MACD crosses up or RSI rises from oversold
➡️ Enter long on confirmation candle above VWAP
➡️ SL: Just below the VWAP line
➡️ TP: 2x risk or next resistance zone
❌ Don’t Enter If:
- Price chops above and below VWAP all day (no trend)
- News is about to drop (e.g., earnings or Fed speech)
- MACD and RSI don’t agree with your entry
VWAP Strategy for Binary Traders
This setup works great for binary call options when:
- Price reclaims VWAP after a fakeout
- Expiry is 5 to 15 minutes
- RSI crosses above 50
- Entry is timed on a clean bullish candle close above VWAP
📌 For puts: Just flip the setup — price breaks below, retests, and fails to reclaim VWAP.
Tools You’ll Need
✅ VWAP overlay on your chart (most platforms offer it)
✅ MACD or RSI for confirmation
✅ Volume indicator (or volume-based candles)
✅ A reliable news calendar (to avoid sudden spikes)
Final Thoughts
The VWAP Reversal Strategy is not flashy, but it’s used by pros every day to:
- Avoid false breakouts
- Trade with confirmation
- Get excellent reward-to-risk setups
It works on stocks, crypto, binary setups — even gold and forex.
Just wait for the second move. The trap. The retest. Then strike.
📈 Want a cheat sheet or downloadable template for this strategy? Drop a comment or hit us up.
