Is Valero Ready for a Break Out?

Published on Wednesday, 20 June 2012 06:48 Written by TradersHuddle Wire

New York, June 20th (TradersHuddle.com) - Valero Energy Corporation (NYSE:VLO) closed the trading day at $23.03, near its 50 day and 200 day moving averages set at $22.71 and $23.10 respectively. Valero's price action placed the stock above the 50 day moving average but below its 200 day moving average, providing a nice trading setup with clear reference points.

Valero Energy Corporation (NYSE:VLO) is an independent petroleum refining and marketing company that owns and operates refineries in the United States, Canada, and Aruba. The Company produces conventional gasolines, distillates, jet fuel, asphalt, and a series of petrochemicals and lubricants.

Valero seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach appears to be the best way to maximize possible movements in the stock, as traders could establish a small position in Valero and wait for the stock to break out above the 200 day moving average at $23.10. Then they could add to the position as momentum builds with the breakout. On the other hand, if support being referenced at the 50 day moving average set at $22.71 breaks, it could signal further downside for Valero in the horizon.