Valero Energy Surges 3.62% on Bullish Engulfing Pattern and Golden Cross, Eyes $145.70 Resistance

Valero Energy (VLO) Technical Analysis

Valero Energy (VLO) closed the most recent session at $145.37, reflecting a 3.62% gain. This upward movement aligns with a bullish engulfing candlestick pattern, suggesting a potential reversal from a prior bearish phase. Key support levels appear to be consolidating around $135 and $130, while resistance is forming near $145.70 and $147.50. A hammer pattern on August 18, 2025, reinforces the $130–$135 zone as a critical support cluster, which could validate a continuation of the uptrend if the price holds above these levels.

Candlestick Theory

Recent price action reveals a strong bullish bias. The recent session’s candlestick closed near the high, indicating aggressive buying pressure. A series of higher lows and higher highs since mid-August 2025 suggests a developing uptrend. However, caution is warranted as the price approaches the $145.70 resistance level, where prior bearish divergence in candlestick shadows was observed. A breakout above this level may trigger a retest of the $147.50–$148.80 range, while a failure to hold above $140.13 could invalidate the bullish narrative.

Moving Average Theory

Short-term momentum is supported by the 50-day moving average (50DMA) crossing above the 100-day and 200-day moving averages (100DMA and 200DMA), forming a "golden cross" in early August 2025. The 50DMA currently sits at approximately $141.50, acting as dynamic support, while the 200DMA at $137.50 remains a key baseline. The price’s consistent positioning above both the 50DMA and 200DMA reinforces a bullish trend. However, the 100DMA at $139.80 may act as a temporary hurdle if the price retraces.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the MACD line crossing above the signal line in late August 2025, signaling a potential trend reversal. The KDJ stochastic oscillator (K at 78, D at 62) indicates overbought conditions, suggesting a possible pullback. Divergence between the KDJ and price action—where the K line peaks lower while the price continues to rise—may hint at waning momentum. However, the MACD’s bullish crossover provides a confluence signal for short-term buyers.

Bollinger Bands

Volatility has expanded recently, with the price testing the upper Bollinger Band at $145.70. This suggests heightened buying activity and potential overbought conditions. A contraction in the bands during mid-July 2025 preceded the recent breakout, indicating a period of consolidation before the upward surge. If the price closes above the upper band, it may extend the uptrend, but a reversal below the middle band ($141.50) could signal a shift in sentiment.

Volume-Price Relationship

Trading volume has spiked during the recent rally, particularly on days with significant price gains (e.g., August 22, 2025). This volume surge validates the strength of the bullish move. However, declining volume on subsequent consolidation days (e.g., August 21, 2025) may indicate waning conviction. A sustained increase in volume during upward breaks would strengthen the case for continuation, whereas divergent volume patterns could foreshadow a reversal.

Relative Strength Index (RSI)

The RSI is currently at 70, indicating overbought conditions. While this does not guarantee an immediate correction, it suggests caution for new long positions. A sustained move below 50 would signal a bearish shift, whereas a retest of the 70 level could confirm bullish momentum. Divergence between RSI and price action—where the RSI peaks lower while the price hits new highs—may indicate weakening momentum.

Fibonacci Retracement

Key Fibonacci levels from the May–August 2025 rally (low at $121.58 to high at $145.70) include 38.2% at $135.50 and 61.8% at $130.70. The price’s current position near the 78.6% retracement level ($145.70) suggests a potential exhaustion point. A breakdown below the 61.8% level would target $130.70, while a breakout could extend the move toward $148.80.

Backtest Hypothesis

The backtest results for a MACD golden cross strategy (buy on crossover, hold for 10 days) show a 42.19% return, marginally outperforming the benchmark’s 42.17% return. This strategy’s maximum drawdown of 0.00% and Sharpe ratio of 0.49 highlight its conservative nature, albeit with limited risk-adjusted returns. The 10.73% CAGR suggests it is more suited for stability-seeking investors rather than aggressive traders. While the MACD signal aligns with the recent bullish momentum, the overbought RSI and Bollinger Band proximity imply potential volatility, which the strategy may not fully account for.