VWAP Bands Indicator
Platform: MT4 Type: Channel Last update: October 13, 2024The VWAP Bands Indicator for MT4 displays a channel with a few colorful layers and a white central line. On the first glance, it may strike an resamblance to the Bollinger Bands, but the main difference is that it uses a volume weighted average for that central value.
For most of the time, these three extensions stand a good place to consider entry points. Let’s see how to utilize them.
Explaining the VWAP Bands and trading rules
This approach for trading is based on an assumption that price always come back to the fair value defined by the white moving average in the center. If you closely watch this behaviour, you will notice that it really does so.
The best opportunities occur at the rejection of the blue and green band, so it’s required to watch for price action patterns like pin bar. When such setup is in place, you can open a position with a take profit target exactly at the middle line.
Take a look at the following charts.
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