Every chart is a tug of war between buyers and sellers, and most people read the candles and hope for the best. But if you want to take your analysis further, it’s worth exploring how Brian Shannon uses AVWAP to gain an edge.

Brian Shannon of Alphatrends built his whole approach around skipping the guesswork — anchored VWAP gives you an objective answer to who actually has the upper hand, and a clean framework for when to act on it. Learning how Brian Shannon uses AVWAP also offers clarity in complex trading environments.

Check out Brian’s full presentation to the CMT association here

How AVWAP tells you who’s in control

The logic comes down to one relationship: where price sits relative to the AVWAP line, and which way that line is sloping.

When price trades above a rising AVWAP, demand is outweighing supply. Buyers are paying up and defending their position on every dip, and as long as that holds, the path of least resistance stays higher. 

Flip it around and a declining AVWAP with price stuck underneath tells you sellers are firmly in charge — they’re unloading shares faster than anyone wants to absorb them, and every bounce becomes a fresh chance to sell.

The only thing that changes is which side of the line price is camping on. The slope adds a second layer of information: a steep, fast-moving AVWAP signals real urgency from whichever side is winning, while a flat AVWAP suggests neither side has conviction yet i.e. usually a sign to sit on your hands rather than force a trade.

Buy and sell signals using the Brian Shannon AVWAP

Knowing who’s in control is only half the job. The entry still matters, and this is where most traders get impatient. Notably, how Brian Shannon uses AVWAP can help manage those entry points decisively.

Shannon’s rule is to avoid acting on the exact extreme of a move, since there’s no confirmation the tide has actually turned. Instead:

• For longs, wait for price to show strength again after a pullback — a bounce that reclaims the AVWAP from the recent high and starts pushing higher, not the low itself. The stop sits below the most recent relevant low.
• For shorts, wait for weakness to show up after a failed rally, i.e. by dropping below the AVWAP from the low, not the first moment price cracks. The stop sits above the most recent relevant high.

That extra patience costs you some of the move, but it buys back a level of confidence that buying the bottom or shorting the top can never give you.