AVWAP Examples, Plus Trading MSOS, AAL, & TSLA (Again)
Taking a look at how I have been using AVWAP to find quality trades consistently.
Last week the focus was on the rejection at resistance, keeping TSLA below the trendline and setting up for more downside.
The two scenarios were dependent on the action near 182.63.
The rejection came through and shares got as low as 160.51, rewarding those that got in early with puts.
So what’s next?
I think there is more downside on the way for TSLA and will get into those details with this week’s trades.
I wanted to take another look at anchored volume weighted average price (AVWAP) and the very simple way I use it when trading.
MRVL was a recent winner that was a direct beneficiary of using this tool.
Anchored from the gap up off of its recent low pivot point, the AVWAP line provided a nice springboard.
Notice there was prior respect of the line at the start of the year, setting up for the next test of this support.
That test happened mid-March and the retest gave a great entry point just a couple of weeks later.
The key takeaway here is, the AVWAP line had been respected twice before taking entry for a long trade on the third bounce.
Not every AVWAP line will be respected. It is important to wait for the retest and bounce or break before taking a position.
Many but not all platforms will have AVWAP as an option, but I highly recommend taking advantage of this tool if it is available.
If you have not noticed already, my favorite platform to utilize is Trendspider. One of the many reasons is how quickly and easily I can apply AVWAP to every chart.
(There is a link at the bottom of every post that you can use to sign up for Trendspider if you are interested.)
And there are many different spots to anchor from. The MRVL example above used VWAP anchored to the gap up off of a low point on the chart.
This is a spot I like to anchor to.
I also like to anchor to reported earnings, any major gaps up/down candles (especially at reversal points), high/low pivot points, and the beginning of a week, month, or quarter.
Any major events that create a big move are also worth anchoring to.
I will then check in on these lines and remove any that the candles do not seem to interact with.
One of this week’s trades, AAL, is set up based off of AVWAP with the candles sitting at a key level. DAL reporting this week could also make things interesting for options expiring in May, giving a full month of action.
Another trade I am considering is MSOS. This chart has my attention, and the action could keep picking up.
And as mentioned, I need to continue following up with more details on what to do next with TSLA. There is money to be made in the next couple of weeks.
After today’s action, I expect more trade opportunities in energy and will start outlining the tickers and set ups I’m looking at.
Time to get to these trades!
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