Does VWAP reset every day?

Session VWAP does, at whatever boundary your platform calls the session start. Weekly and monthly variants reset less often. If you want an arbitrary starting point — an event rather than a clock — that is [anchored VWAP](/glossary/anchored-vwap/).

Is VWAP a support or resistance level?

It is a reference, not a barrier. Price interacts with it because a large population of execution algorithms is benchmarked to it, which concentrates activity nearby. That concentration explains reactions; it does not make the line hold.

What is the difference between VWAP and a moving average?

A moving average weights every bar equally over a fixed lookback and never resets. VWAP weights by volume and starts from a defined anchor, so it reflects where contracts actually changed hands rather than where the price happened to be printed.

Glossary

VWAP

Also called: volume-weighted average price · session VWAP

VWAP is the volume-weighted average price since a reset, usually the session open. It marks the average price at which business was done, so it acts as a dynamic reference for fair value. Standard deviation bands measure how far price has extended from it. It is a description, not a signal.

How it is built, and why the reset matters

Each trade contributes its price weighted by its size. Divide the running sum of price times volume by the running sum of volume and you have VWAP. Two consequences follow immediately. It is cumulative, so it stiffens as the session ages — the first ten minutes move it freely, the last hour barely at all. And it is entirely determined by where you started counting.

That starting point is a choice, not a fact. A VWAP reset at the regular-hours open and a VWAP reset at the overnight open are different lines on the same chart, and they disagree most on exactly the days you care about. Fix your convention, write it down, and never compare your line to someone else's without checking theirs.

The bands

The ±1, ±2 and ±3 bands measure dispersion of traded price around VWAP, weighted by volume. They answer one question: how unusual is the current distance from the day's average, relative to how spread out the day has been so far. Nothing more.

Two cautions. Platforms compute these bands differently — some weight the variance by volume, some do not, and some plot a simple standard deviation of price — so identical settings on two platforms can give visibly different bands. And the underlying distribution is not normal, so "two sigma" carries none of the probabilistic meaning the notation implies.

What it is actually for

VWAP exists because it is an execution benchmark. Large orders are worked over hours and judged against the day's volume-weighted average, which is why the level is watched — not because it exerts a force, but because a population of algorithms is being scored against it.

For a discretionary reader it is context, in the same family as the point of control: a statement about where business has been done. It pairs naturally with a volume profile, which answers the same question with more shape and no time weighting.

A worked example

In a synthetic ES session, VWAP sits at 5 321.50 by midday with a one-sigma band 4.75 points wide. Price trades up to 5 336.00 — a little over three sigma — on rising volume, then spends ninety minutes between 5 333 and 5 337 while VWAP itself climbs to 5 326.25.

Read what happened to the z-score. Price never came back; the average came to it. The extension resolved from 3.05 sigma to roughly 2.0 without a single point of retracement. Anyone who sold the three-sigma tag was flat-to-wrong for ninety minutes while their reason for being short quietly evaporated.

The trap

Fading the band. In a trending session price can ride the second or third band for hours, because a trend is precisely the condition in which the average lags the price. The band is a measure of distance, and distance alone has never been a reason to take the other side.

The commonly repeated figure is that price returns to session VWAP in around 80% of sessions. It has never been published with a defined instrument, session convention, tolerance or sample, so it cannot be checked — and the sessions where it fails are the trending ones, which is to say the sessions where the trade costs the most. If you want to use mean reversion to VWAP, require the z-score to be contracting before you act, and log the exception.

Frequently asked

Does VWAP reset every day?: Session VWAP does, at whatever boundary your platform calls the session start. Weekly and monthly variants reset less often. If you want an arbitrary starting point — an event rather than a clock — that is anchored VWAP.
Is VWAP a support or resistance level?: It is a reference, not a barrier. Price interacts with it because a large population of execution algorithms is benchmarked to it, which concentrates activity nearby. That concentration explains reactions; it does not make the line hold.
What is the difference between VWAP and a moving average?: A moving average weights every bar equally over a fixed lookback and never resets. VWAP weights by volume and starts from a defined anchor, so it reflects where contracts actually changed hands rather than where the price happened to be printed.