Valero Energy (VLO) Surges 3.94% on Bullish Engulfing Pattern Amid Key Support Levels

Valero Energy (VLO) has experienced a 3.94% rally in the most recent session, closing at $185.43 on 2025-11-18. This sharp upward movement forms a long bullish candlestick, suggesting strong buying pressure. The prior session’s bearish reversal (1.85% decline to $178.40) creates a potential bullish engulfing pattern, indicating a short-term shift in momentum. Key support levels emerge around $175.62 (2025-11-06 close) and $167.67 (2025-10-01 close), while resistance is likely near $185.62 (2025-11-18 high).

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Candlestick Theory

The recent price action shows a bullish engulfing pattern following a bearish session, reinforcing a potential trend reversal. A tweezers bottom (equal lows at $175.62 on 2025-11-06 and $175.78 on 2025-11-13) suggests a psychological support level. However, a bearish divergence in the RSI (discussed later) may indicate waning momentum despite the strong close.

Moving Average Theory

The 50-day MA (calculated as $163.42) is below the 200-day MA ($146.89), indicating a long-term downtrend. However, the 50-day MA is rising, and the price has recently crossed above the 50-day MA, suggesting short-term strength. The 100-day MA ($159.14) acts as a dynamic support. If the price sustains above the 200-day MA, it may signal a bullish crossover.

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MACD & KDJ Indicators

The MACD line (12-period EMA minus 26-period EMA) shows a bullish crossover, with the histogram expanding, indicating strengthening momentum. The KDJ (Stochastic RSI) is in overbought territory (K at 85, D at 78), suggesting caution. While the MACD supports continuation, the KDJ warns of potential exhaustion, creating a divergence that may foreshadow a pullback.

Bollinger Bands

Volatility has expanded, with the price near the upper band ($185.62), indicating overbought conditions. The 20-day SMA (calculated as $175.62) aligns with the recent support level. A break below the lower band ($169.56) would signal increased bearish risk.

Volume-Price Relationship

Trading volume spiked to 3.39 million on the 3.94% rally, validating the move. However, volume has been declining on subsequent bearish sessions (e.g., 2.31 million on 2025-11-17), suggesting weakening conviction. This divergence implies the rally may lack sustainability unless volume increases on follow-through buying.

Relative Strength Index (RSI)

The RSI (14-period) is at 68, approaching overbought territory. While not extreme, this suggests caution. A break above 70 would confirm strength, but a failure to do so could trigger a pullback toward the 50-level ($170.14).

Fibonacci Retracement

Key Fibonacci levels from the recent low ($167.67 on 2025-10-01) to the high ($185.62 on 2025-11-18) are 38.2% at $176.80, 50% at $176.65, and 61.8% at $176.47. The price has tested these levels multiple times, with $176.65 acting as a critical pivot. A break above $185.62 would target the 127.2% extension at $194.30.

Backtest Hypothesis

The Tweezer Bottom pattern backtested from 2022 to 2025 shows a 33.33% win rate over 3 days, rising to 66.67% at 10 and 30 days. This aligns with the recent pattern near $175.62, where the price has historically shown a higher probability of continuation. The maximum 30-day return of 7.58% suggests the strategy is moderately profitable, though modest. Integrating this with the current analysis, the Tweezer Bottom at $175.62 and bullish engulfing pattern imply a high-probability entry for a long position, with a stop-loss below $175.62.

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