Working with Anchored VWAPS

Tracking a Potential $QUIS.V breakout + Upgraded PT/Cool Story

Happy Sunday to you all hope its sunny and beautiful wherever you find yourself today!

I watched Ben’s, @PatternProfits , latest video posted to his twitter account last night and had so many things click for me for using the Anchored Volume Weighed Average Price, moving forward, AVWAP. It’s a testament to how Ben teaches through his videos. He has a strong command of the tools he’s using and his delivery of the information through the video was spectacular. As someone who likes using Bollinger Bands and Keltner Channels, the AVWAP felt like an evolution of sorts and a new way to see and read charts. Here is the link to Ben’s video incase you wish to take it in.

I have seen the VWAP around on twitter before and never was really able to make sense of it, i.e., understand its consequences on crosses. Now that I have gained that understanding through Ben’s video lets break down what the AVWAP is:

Firstly, let’s separate the Anchored part of the metric and define the Volume Weighted Average Price (VWAP):

The VWAP gives the average price a security has traded at throughout the day, based on both volume and price. It is deemed to give traders the trend and value of a security. - Taken from Investopedia.

The formula is calculated by adding up the dollars traded for every transaction, (which is the price multiplied by the number of shares traded) and then dividing by the total shares traded.

Adding my own interpretation of this here, it provides context on a chart for where buyers and sellers have control or take control of a security. Think about a stock that is sitting at $2, and shoots to 2.50, that on the face of it looks great, but if that move up is on low volume (thin) that price wont have support at 2.50 as the number of transactions that occurred at the high wont be great. The calculation and its answer provides a trendline showing which way price action is going and crosses on that line let you know there is a change in how the market is valuing that security, these would act as alerts, and from there you would have the stock on watch to see if the trend is confirmed to the upside, or if it retests/breaks-down below the VWAP.

Now when we are speaking about an Anchored VWAP, we are referring to a point in time as our starting point for determining the calculation. Essentially you anchor the formula to start from a point of interest deemed to be significant on the chart you are viewing. Low’s of bases, Highs of breakouts, etc. Let me get up Quisitive’s chart now and lets take a look at what we got.

I have anchored the first VWAP at the Low Close of the last base for $QUIS.V. Utilizing the strategy of the “tag” - when the security’s price first crosses the 1st VWAP its deemed significant (could be a point where stock breaks down) I applied another AVWAP starting at this day. Now this is when understanding and intuition comes into play. You want to have the least amount of AVWAPS showing the greatest amount of relevancy. I don’t think I would get much more useful information applying 8 or 9 more VWAPS for Quis as it crosses AVWAP #1 many more times. I can see from these two applied that the buyers start to take back control and the AVWAP lines from the bottom trend slightly up. AVWAP #1 becomes support, is tested again early in march on that hammerstick candle and now AVWAP #2 is the relevant line acting as support currently. This is what I want to see, the passing of the Baton as Ben mentions in the video. It can be implied that Quis is showing strength and is now holding a higher VWAP from the second anchor. Any breakdown below this would/could signal short term negative price action and potential test of the first AVWAP.

Lets now discuss the High AVWAP (the red line coming down from the high set in Mid Feb. You can see the VWAP act as resistance on that reverse hammerstick candle on March 3rd. That is the date Quisitive announced Microsoft will be acting as a Co-Sell Partner for LedgerPay for context to the candle. Sellers won the day.

A few days later we have what many called Capitulation day on Friday March 5th. Sure felt like capitulation day in my portfolio I’ll tell ya that for free. I did take notice on how Quis responded and closed the day up forming a decent hammerstick candle. And then It went again to test the High set in Feb and showed some strength closing above the first High AVWAP a couple times. This is where I have set up AVWAP #4, the second top VWAP. I’m using this to provide context for where Quis may next face resistance In the short term. That is to say, that the first AVWAP from the top is still relevant and currently is acting as resistance on Quis’s price action. If Quis can cross and close over the first AVWAP up next is the second top one.

Utilizing this indicator- I want to see what was once resistance for QUIS (first AVWAP from high top) become support in the short term. I want to see constructive consolidation in the range between High VWAP #1 and high VWAP #2 and set up the pinch.

I have said it many a time, Once LedgerPay launches no matter where Quis’s shareprice is, its going to pop. Iwant Quis to be showing tight price action trending up so we can get some serious velocity in SP to the upside on the news of LedgerPay launching. This could be a great trade for ST traders if this all plays out. But we don’t get to decide that.

Now for a little aside, a pretty trippy thing happened yesterday. Let me first start by dropping a little news on an upgraded PT for Quis from Canaccord Genuity:

$2.30 CAN PT, love to see it. I read this quick piece yesterday before work. And guess who I ran into at work last night. Robert effing Young, the analyst who gave this PT. It was surreal, I wont disclose more about the nature of the interaction as a I want to protect his privacy, but I put the two together when he gave me his name and mentioned his company financed some growing Canadian companies, I asked him what company he worked for and that’s when I said, Did you just give Quisitive the $2.30 PT? He looked a little stunned that I was asking him this haha. We had a little back and forth convo on Quis and LedgerPay. He has had discussions with Mike Reinhart the CEO of Quisitive and He mentioned that from his discussions there are many companies that have been waiting for Microsoft to have a payments processing solution utilizing Azure, as many don’t want to use what Amazon is putting out for payments fintech as these companies typically compete with Amazon in some other space. Walmart was mentioned as a company that Quisitive may engage for LedgerPay.

Now, in sharing this news I want to be responsible and say LedgerPay is still awaiting Launch. Its adoption rate and penetration is still speculative. We are still awaiting the launch of LedgerPay and there is alot of work to do yet. I put together some DD and it can be found on my page if you want to learn more about Quisitive.

I Hope this stack on Quisitive was informative. As mentioned I learned the AVWAP from Ben (@PatternProfits) So credit is due to him for his teaching of the indicator. I used Investopedia briefly to help define VWAP. And from there applied my own understanding and breakdown of how to potentially utilize the information the AVWAP provides for signaling Breakouts or a potential Breakdown.

Disclosure: I own shares of Quisitive and I am long on Quistive. This piece is not a recommendation to Buy Quisitive. I am not getting paid for this post. Please do your own DD on the company before buying.

Cheers,

Luke