Valero Energy Surges 9.23% on Bullish Engulfing Pattern, High-Volume Buying

Valero Energy (VLO) has surged 9.23% in the most recent session, marking a two-day rally of 10.92%. This sharp upward movement, coupled with a high-volume close (9.06 million shares), suggests strong institutional or retail buying pressure. A candlestick analysis reveals a Bullish Engulfing pattern on the daily chart, with the recent bullish candle body fully encompassing the preceding bearish body. Key support levels are evident at $162.75 (2025-12-24 low) and $160.97 (2025-12-31 low), while resistance aligns with the recent high of $184.98 (2026-01-05). A breakdown below $162.75 could trigger a retest of the $159.90–$161.94 consolidation range established in late December.

Moving Average Analysis
The 50-day moving average (approx. $158.50–$160.50) and 200-day MA (approx. $145.00–$147.00) are both well below the current price of $180.57, confirming a multi-month uptrend. The 100-day MA (approx. $155.00–$157.00) acts as a dynamic support. The price’s separation from the 200-day MA by over $33 suggests strong momentum, though a pullback to test the 50-day MA could indicate short-term exhaustion.
MACD & KDJ Indicators
The MACD histogram has turned positive, with the fast line above the signal line, reinforcing bullish momentum. The KDJ stochastic oscillator shows overbought conditions (K: 85–90, D: 75–80), aligning with the RSI’s overbought reading (>70). However, a divergence emerges: while prices continue to rise, the KDJ’s K-line has begun to flatten, hinting at potential near-term exhaustion. A bearish crossover in the MACD or a stochastic divergence could precede a correction.
Bollinger Bands
The recent price surge has pushed Valero’s shares to the upper Bollinger Band, with a volatility expansion observed since mid-December. The bands’ width has widened by 15–20%, typical of a breakout phase. If the price consolidates within the bands without breaching the lower band ($155.00–$160.00), the trend remains intact. A close below the middle band ($170.00–$175.00) would signal weakening momentum.
Volume-Price Relationship
The recent rally is supported by expanding volume, with the current session’s 9.06 million shares surpassing the 30-day average of 3.5 million. This validates the sustainability of the move. However, if volume declines in subsequent up days while prices remain elevated, it could indicate waning conviction. Conversely, a surge in volume during a pullback to $165.31–$168.50 would signal accumulation.
RSI Interpretation
The 14-day RSI stands at ~72–75, reflecting overbought territory. While this is not an immediate sell signal in a strong trend, a failure to break above 75 and a subsequent close below 65 would suggest a pullback. A RSI divergence (lower highs in RSI vs. higher price highs) is already forming, which historically precedes reversals in extended trends.
Fibonacci Retracement
Key Fibonacci levels from the December 2025 low ($130.00–$135.00) to the January 2026 high ($184.98) include:
- 23.6%: $172.00
- 38.2%: $167.50
- 61.8%: $160.00
The current price of $180.57 is near the 76.4% retracement level, suggesting a potential retest of the 61.8% level ($160.00) as a critical support. A break below this would invalidate the bullish case.
Confluence & Divergences
The strongest confluence occurs at the $162.75–$165.31 zone, where multiple support levels (candlestick, Fibonacci, and moving averages) converge. Divergences between the RSI and price action, combined with the stochastic oscillator’s flattening, suggest caution. While the trend remains intact, a consolidation phase or pullback to test the 38.2% Fibonacci level ($167.50) is probabilistically likely before a resumption of the uptrend.

In summary, Valero Energy’s aggressive move higher is supported by bullish candlestick patterns, aligned moving averages, and strong volume. However, overbought momentum indicators and Fibonacci retracement levels highlight increased risk of a near-term correction. Traders should monitor the $162.75–$165.31 confluence zone and watch for a bearish MACD crossover or stochastic divergence as potential sell signals.