The VWAP has dominated the action today, and for the week. It sets in play some nice risk/reward opportunites for the final day of the week.

Today has seen a steady uptrend, as we recover from the steep declines of the start of the week. The chart below shows the Volume Weighted Average Price (VWAP) in pink, with standard deviation lines either side. This is the chart for today Thursday 25th October (5 min bars).

As can be seen we have held above the pink VWAP all day. every time the market came down to test it, it has acted as support. This has continued into the close.

US Crude Oil Chart for Thursday 25th October. Market has stayed above the pink VWAP all day, showing a steady upward trend.

We can take today’s action and apply it to the chart for the week. Below is the US crude oil chart (CLZ8) from Monday 22nd October, through to the time of writing, Thursday evening.

As can be seen the week started with strong declines. We have then traded sideways until today, where the market has shown some signs of slow recovery. At the time of writing we are hovering around the pink VWAP for the weekly chart. If we can break above that pink VWAP overnight and into tomorrow morning, and hold above it, then that gives a potential trade for the top of the VWAP standard deviation lines around $69.20 (red line on the chart)

So trade idea 1 : Long Crude Oil on Friday, if we are above the weekly VWAP, with a target of around $69.20 and stops around below the weekly VWAP

However, if overnight we fail to hold above the weekly VWAP, then similarly we can target the lower VWAP bands (green on the chart)

So, trade idea 2 : Short Crude Oil on Friday, if we hold beow the pink weekly VWAP, with a target of around $67.60, and stops above the weekly VWAP

Weekly chart for crude oil. 30 min bars. The market has held below the pink weekly VWAP all week. The first time it tested it failed. We are currently hovering near it, and may break above.

This article and all the contents of this website are for educational use only. No actions or financial decisions should ever be made based on its contents. Trading is a high risk form of investment where substantial losses can be made as well as gains. Always seek professional financial advice in all cases, before making any type of trades.

About the author

Trading and Investment

Traded the markets for over 15 years, including Commodities, Bonds, Currencies, Equities, and Indices. I have also worked as a Chartered Financial Planner.
CeMAP, CeFA, DipFA, AdvDipFA, Ba(Hons) Economics, Chartered ALIBF

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