How to use Order Flow VWAP to determine market direction?
How to identify a RANGE-BOUND day? I use a three-minute chart and I anchor that Order Flow VWAP to the first three-minute bar during the regular trading hours.
Anytime that I see that VWAP spent a majority of the time in that opening three-minute high and low, that indicates to me that we are just going to be a range-type day.
How to identify a TREND UP day? Now, once this VWAP gets above the opening three-minute high and the market starts to go up, this tells me that they’re establishing price section above the open, and it has the possibility to be a trend up day.
How to identify a TREND DOWN day? We’re looking for the exact opposite of what we look for in a trend up day. If that anchored VWAP gets below that opening three-minute low below that horizontal line and the price action starts to get below it, to me that represents a TREND DOWN day.
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