Why did this sock not go much above VWAP today despite a 1.4% 1st candle?

[sva31855]

Despite the 1st candle being 1.36%, the stock did not go much above VWAP. Why?

Looking for direct and crisp answers--thanks!

 

[vishal_k04]

VWAP like any other indicator does not guarantee price movement. Also if you look at the historical data, most of the stocks have avg daily volatility of up to 2%, of course there are events when they move up to 10% also, but that's very rare.

 

[Pradeep Narayan]

One of the many scenarios:
Assume I would want to sell 600 shares at 50 Rs. gain, in this scenario

 

[sva31855]

Thanks Vishal and Praveen.

I also realized later that this happened most likely because: most buying happened in 1st 5 min only--so VWAP shot up in 5 min, but not after that.

This I feel is typical behaviour of retail, and not of smart money. Smart money tends to buy slowly at VWAP. But, retail would immediately rush in.

So my sensemaking: Retail piled on in 1st 5 min--due to some news or pattern or level. But then Smart money/smart traders sold.

This is also visible in 1-min chart, where first candle itself is ~0.8%, causing a spurt in VWAP. Smart traders will typically not buy like this unless some big news.

 

[alihoyath]

This VWAP is a lagging indicator which means it’s movement is based on past market data. Maybe you can try changing the input data and check it out.

 

[Nish]

This VWAP is a lagging indicator which means it’s movement is based on past market data. Maybe you can try changing the input data and check it out.

View attachment 46457

Despite the 1st candle being 1.36%, the stock did not go much above VWAP. Why?

Looking for direct and crisp answers--thanks!

Too much big candles ( more than a perticular stocks Hourly/Daily / Weekly volatility range - mostly 2% but depends ) are mostly retraced back to original price of the day in the same day or more days.

Some time the retracement results in Pole-Flag pattern or Double Top/ Double Botom / or V-shaped patterns.
Best time to take a trade in such cases , is to allow to complete the pattern and then initiate a trade !

 

[poojamathur]

@ vishal_k04 I agree with you that the indicator VWAP like the other indicators cannot guarantee the movement of price. To be precise nothing can be actually guaranteed in the market.