I've used VWAP quite extensively when trading Nifty, and I find it complements other indicators well, especially in short-term trading like day trading or scalping. One of the strengths of VWAP is its ability to provide insight into the market's average price level, considering both price and volume. This can be really helpful in confirming trend strength or identifying potential reversal points.
From my experience, VWAP is particularly useful at the start of the trading session. It's pretty effective in identifying whether the price is on the stronger (upper) or weaker (lower) side of the day's trade when combined with other indicators like RSI or MACD. For instance, if the price moves significantly above the VWAP and the RSI is also high, it might suggest an overbought condition, potentially signaling a shorting opportunity. Conversely, alignment of price below VWAP with a low RSI might be indicative of an oversold condition.
In terms of time frames, for day trading on Nifty, I usually keep my charts on a 5-minute or 15-minute basis to ensure I catch crucial pivots and scalps. For swing trading, VWAP can still be handy, but I essentially focus on multi-day frameworks like hourly charts while considering overall trend alignment with longer-term moving averages.
It's also worth noting that VWAP can sometimes be less predictive during periods of erratic market behavior since it lags compared to faster-moving indicators. Hence, it's crucial to use it alongside other technical tools. Have you found any particular combination of indicators or settings that maximizes VWAP's effectiveness in your trading strategy?