Phillips 66 Rally Gains Momentum with 50-Day MA Crossover and MACD Golden Cross as Price Targets $130.00–$131.00

Candlestick Theory

The recent three-day rally in Phillips 66 (PSX) features bullish candlestick patterns, including a strong white candle on August 22, closing near the session high at $129.94. This suggests aggressive buying pressure, with key support levels forming at $122.50 (prior consolidation zone) and $119.50 (historical trough). Resistance is likely near $130.00–$131.00, where prior rejections occurred. A break above $131.00 could target $134.00, aligning with a Fibonacci retracement level from the May–July decline.

Moving Average Theory

Short-term momentum is reinforced by the 50-day MA (currently ~$124.00) crossing above the 200-day MA (~$120.00), signaling a bullish trend. The 100-day MA (~$122.00) acts as dynamic support. Price remains above all three averages, indicating a strong uptrend. However, the 200-day MA may act as a psychological floor if the rally stalls.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line (Golden Cross) on August 22, corroborating the bullish thesis. The KDJ indicator shows the %K line rising above %D, suggesting momentum is gaining traction. However, the RSI (discussed below) is approaching overbought territory (~68), hinting at potential short-term exhaustion. A divergence between price highs and RSI could signal a pullback, but the MACD’s strength suggests continuation.

Bollinger Bands

Volatility has expanded recently, with price near the upper band on August 22, reflecting heightened optimism. The bands’ width has widened from a prior contraction in mid-August, indicating a breakout phase. If the trend persists, the upper band may rise to $132.00–$133.00. A drop below the middle band (~$127.00) would invalidate the bullish case.

Volume-Price Relationship

Trading volume spiked to 2.67 million shares on August 22, validating the price surge. The volume profile shows consistent above-average activity during the rally, suggesting institutional participation. However, a decline in volume during follow-through days could indicate waning momentum. The On-Balance Volume (OBV) trend remains upward, reinforcing the sustainability of the move.

Relative Strength Index (RSI)

The 14-day RSI is approaching 70 (~68), signaling overbought conditions. While this often precedes a correction, the RSI has not yet breached 70, leaving room for further gains. A close above 70 would extend the bullish phase but increase the risk of a retracement to the 50–60 range. The RSI’s alignment with the MACD suggests the uptrend remains intact for now.

Fibonacci Retracement

Key Fibonacci levels from the May–July decline ($112.00–$134.00) include 38.2% at $125.50 and 50% at $127.00. The current rally has surpassed the 38.2% level, with $130.00–$131.00 representing the next target. A breakdown below $124.00 (61.8% retracement) would indicate a deeper correction.

Backtest Hypothesis

The MACD Golden Cross strategy, tested on PSX, yielded a 53.77% return over 15 days, outperforming the benchmark by 14.37%. This aligns with the current technical setup, where the MACD crossover coincides with a breakout above the upper Bollinger Band and strong volume. The strategy’s Sharpe ratio of 0.59 and zero maximum drawdown suggest it thrives in low-volatility, trending environments. However, the recent RSI proximity to overbought levels introduces caution, as the strategy historically underperforms during overbought conditions. Integrating a trailing stop-loss at the 50-day MA (~$124.00) could mitigate risk while preserving upside potential.