Anchored VWAP From the Prior-Day High: Reading Overhead Supply
Where a prior rally topped out leaves trapped buyers. Anchoring VWAP to the prior-day high maps their cost basis, and the resistance it creates.
NoVo Options Trading ·
Anchor VWAP to the prior-day high and it plots the volume-weighted average price of everyone who bought near the top of that prior move. Many of them are underwater and waiting to get out at breakeven, which is why that line acts as overhead supply, a resistance zone until price decisively reclaims it.
The mechanism
Buyers stuck near a prior high tend to sell into any rally back to their cost basis (“get me out at even”). That trapped supply clusters around the anchored VWAP from the high, so approaches to the line meet selling. Reclaiming it — price accepting territory above — means that overhead supply has been absorbed, often clearing the way higher.
How to use it
Treat it as a resistance level and a fade zone on approaches from below: a rejection at the prior-day-high anchored VWAP is a short/put scalp back down, targeting a lower level. A decisive reclaim flips it to support (a retest-of-breakout setup). It's most powerful when it stacks with a call wall or the prior-day high itself — overhead supply and a gamma ceiling at one price.
The prior-day-high anchored VWAP is where trapped buyers wait to break even. Price has to absorb that supply to go higher — the line tells you where.
The caveat
Like any anchored line, it's context, not a signal. It matters most when it confirms a dealer level and least as a lone line. Use it to know where overhead supply sits, then let price show acceptance or rejection. Combined with a day-low anchor for support, you have a dynamic supply-and-demand frame for the session.
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NoVo is a software tool for market analysis, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.
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