But what is TWAP, exactly, you might be saying to yourself. If you're familiar with then you've probably a pretty good idea of what this is and how it works. TWAP is a calculation that defines the weighted average price over a specific time period. Traders use TWAP as a trading strategy, or more specifically, an execution strategy, to place large orders without excessively impacting the market price. They break down the large orders into several sets of small orders priced near TWAP. Basically it's but without the element, and most traders will likely use it in a similar fashion as they might use , and that is like a moving average--dynamic .
I like to think of it as displaying a price range over a specified time period (such as a month or a week). This is why I think the closes of the previous period or two are so important. Losing the previous closing price or regaining it can often give you an inclination as to whether at least some of the next period (the one you're currently in) may be or .
Above is a more zoomed out view of ADA/USD
And here's the same image with just the closing price for the time period plotted.
-added string inputs (dropdown boxes) for resolution selections: many from one hour to one year
-added optional labels for tWAPs and their closes
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.