Valero Energy (VLO) Surges 3.22% on Golden Cross and Bullish Indicators, Backtest Strategy Yields 52.71% Return

Valero Energy (VLO) has surged 3.22% in the most recent session, extending a two-day winning streak with a cumulative gain of 3.78%. The price action suggests a potential short-term bullish bias, supported by elevated volume and a breakout above recent resistance levels. Historical data indicates a volatile price range between $121.408 and $163.34, with key support levels at $140.00–$142.00 and resistance at $155.00–$163.00. The recent rally appears to align with a broader uptrend, as the 50-day and 200-day moving averages show the price trading above its 200-day MA, indicating a long-term bullish bias.

Candlestick Theory

Recent candlestick patterns reveal a strong bullish continuation signal. A "Bullish Engulfing" pattern formed on 2025-09-10, where a large bullish candle engulfed the preceding bearish candle, suggesting renewed buying pressure. Key support levels are identified at $140.00 (prior swing low on 2025-08-28) and $135.00 (psychological level). Resistance levels include $158.00 (2025-09-15 high) and $163.00 (2025-09-16 high). A breakdown below $140.00 may trigger a retest of the $135.00 level, while a sustained close above $163.00 could target $168.00.

Moving Average Theory

The 50-day MA (approximately $148.00) and 200-day MA (approximately $139.00) show a "Golden Cross" scenario, where the 50-day MA crosses above the 200-day MA, historically signaling a bullish trend. The 100-day MA at $145.00 further reinforces this. The price has remained above the 200-day MA for over 30 days, indicating a strong uptrend. A break below the 50-day MA may trigger a reevaluation of the trend, while a move above the 100-day MA could validate continued momentum.

MACD & KDJ Indicators

The MACD histogram has shown a positive divergence since mid-September, with the MACD line crossing above the signal line on 2025-09-16, confirming a bullish crossover. The KDJ (stochastic oscillator) indicates overbought conditions, with the K line at 85 and D line at 80, suggesting potential short-term exhaustion. However, the KDJ’s alignment with the MACD suggests a higher probability of a continuation rather than a reversal. A pullback to the 50–60 level on the KDJ would indicate a healthier entry point.

Bollinger Bands

Volatility has expanded recently, with the price trading near the upper Bollinger Band ($163.34), indicating overbought conditions. The 20-day standard deviation is at its highest level in three months, suggesting a potential consolidation phase. A retest of the middle band ($155.00) may occur before a breakout, with the lower band ($146.00) acting as a critical support.

Volume-Price Relationship

Trading volume has spiked to multi-month highs on the two-day rally, validating the price surge. The volume profile shows a positive divergence, with volume increasing as prices rise, indicating strong institutional participation. However, a decline in volume during an uptrend could signal weakening momentum.

Relative Strength Index (RSI)

The RSI is currently at 68, nearing overbought territory (70 threshold). While this suggests a potential pullback, the RSI’s alignment with the MACD and Bollinger Bands indicates that the uptrend remains intact. A drop below 50 would signal a bearish shift, but a rebound above 60 would confirm the trend’s continuation.

Fibonacci Retracement

Key Fibonacci levels from the 2025-06-04 low ($126.54) to the 2025-07-31 high ($137.31) include 38.2% at $132.00 and 61.8% at $129.50. The current price action suggests a retest of the 38.2% level before resuming the uptrend. A breakdown below 61.8% would invalidate the Fibonacci projection.

Backtest Hypothesis

The backtest strategy, which involves buying VLO on a MACD Golden Cross and holding for 20 days, demonstrates a 52.71% return, outperforming the benchmark’s 43.87%. This aligns with the confluence of bullish signals from the MACD, Bollinger Bands, and volume profile. The strategy’s Sharpe ratio of 0.42 indicates moderate risk-adjusted returns, while the 0.00% maximum drawdown suggests robust execution during the test period. The volatility of 29.92% implies that the strategy thrives in high-volatility environments, making it suitable for aggressive traders. Integrating Fibonacci retracement levels (e.g., 38.2% at $132.00) could further refine entry and exit points, enhancing risk management.