My learnings from class held on 17/04/2021 by

Nitish Sir

Anchored VWAP
 Nifty respecting
it during Covid Crash
- AVWAP
based on 2008 crash
2008 Crash

It is an average of price derived from a particular price point aka Anchor price. Usually, we
A brief introduction to take anchor price of the events of high emotional importance (extreme fear) like the
lowest price of 2008 crash as shown in the Nifty monthly Chart. AVWAP based on anchor
AVWAP: price of 2019 Covid crash will hold more importance going forward.
However, for plotting AVWAP, any significant price point can be used as an anchor,
depending on chosen time frame for trading.
 1. Click on Studies tab and type Anchored VWAP in the search box

Steps to plot AVWAP 2. Select Anchored VWAP from drop down, an Anchored VWAP pop up
window will open

on Chart (Zerodha’s 3. Select the Anchor Date (one day prior to the extreme move happened)
e.g., in case of 2008 Crash the lowest price was hit on 27th Oct so we
choose 26th Oct as anchor date.
Kite Desktop) 4. Click Done provided at the bottom of the pop-up window
 • Price of any Instrument tends to react to its average price(like 20

Importance of SMA, 50 SMA etc.). If price has moved far away from its average
price line, then it gets back to it before moving further away this may
happen in following two ways:
average price • Price will fall and reach to its average line known as price wise
correction before going up.

line in the • Price will start consolidating and average line will move up to
reach to the price in due course of time known as time wise
correction.
movement of • Vice versa is also true when price is moving in downtrend.

an • That’s why average price line works as a dynamic support and

resistance for the price of any instrument.
instrument’s • It also help us in determining the trend of the instrument. If prices
are above its average and taking support at the average line before
moving further up its in uptrend.
price • If price is below its average and taking resistance at average line
to move further downward then instrument is in down trend.
 • Since AVWAP is generated by taking the Anchor at
the point of extreme market fear so it works very
good as a support levels in the coming many years
ahead. As in the case of 2008 crash the AVWAP
Why plotted taking it as an anchor has not been broken till
date. It has worked extremely well during the recent
Anchored covid crash of 2020, and Nifty exactly reversed from
the AVWAP average line by taking support here as
shown in the 1st slide.
VWAP is so • Therefore, it is a very important tool for predicting
market bottoms and hence providing golden
special opportunity to invest in the market. When used in
monthly timeframe It has a potential to double the
money within a year if one invests in blue chip
companies available at throw away prices while Nifty
is near this average.
How to
trade with Use Monthly chart of Nifty and plot AVWAP based
on anchor point of extreme fear, Covid Crash of last
year shall work very well as the anchor point for
AVWAP coming many years. Whenever nifty reaches to its
AVWAP levels in monthly chart, invest in blue chip

(Long Term companies to double your money within a year.

Investment)
 • Use Daily chart of the respective instrument
(Option, future, Spot) and plot AVWAP based on
How to anchor point of any recent significant price point like
in case of option contracts its start date is the most

trade with important date for placing anchor to plot AVWAP.

• By help of 20 SMA determine the trend (Price is
trading above 20 SMA uptrend below it downtrend.
AVWAP (For if it's moving up and down by crossing the
20SMAfrequently it’s a no trend market avoid it),
Positional trend can also be identified by eyeballing the general
movement of the price.

trades) • Once trend is determined we can trade the

instrument in the direction of trend by taking entry
near AVWAP and using SL as 2 hourly close of
candles above/below it.
 • Use hourly chart or 15 mins chart of the respective
instrument (Option, future, Spot) and plot AVWAP
How to based on anchor point of any recent significant price
point like in case of option contracts its start date is

trade with the most important date for placing anchor to plot
AVWAP.
• By help of 20 SMA on daily chart determine the
AVWAP (For trend (Price is trading above 20 SMA uptrend below
it in downtrend. if it's moving up and down
intraday frequently by crossing the 20 SMA it’s a no trend
market avoid it), trend can also be identified by

trades) eyeballing the general movement of the price.

• Once trend is determined we can trade the
instrument in the direction of trend by taking entry
near AVWAP and using SL as 2 close of 10 mins
candles above/below it.