Valero's recent drop presents a short-term buying opportunity for a bounce due to its strong prior trend and technical support levels.

But as far as Valero Energy stock is concerned , we have many years of trading to look at. We are seeing a drop in oil prices, and consequently, Valero's stock also fell slightly during today's session, by approximately 2%. But how do you view Valero now, Charles?

Honestly, the trend was amazing, so any pullback in the stock price was remarkable, and that's exactly what I'm looking for: an opportunity for a quick recovery. I believe the entry point here is appropriate at a key technical level, and I would consider it a quick entry and exit opportunity .

Crude oil prices have certainly fallen, and this is due to two reasons: First, Saudi Arabia appears ready to resume its operations, in light of the Houthi attack on the pipeline that was almost their only outlet outside the Strait of Hormuz.

Secondly, as you know, there are rumors in the market that Iran may be willing to make some concessions to open the Strait of Hormuz if the United States backs down. Personally, I am not convinced by these rumors, and that is precisely why I prefer the " exploitation from low to high" strategy.

Therefore, I will be monitoring the buy options (calls) on October 2nd with an execution price of 395 at 850 or lower. The stop-loss level should be slightly higher than the 40% stop-loss level.

There is a possibility that the stock will stop at around 393, a level that covers a small price gap. But if it rises, we could see a rapid jump to around 415 or 420, and that could easily yield a return of more than 100% if the stock returns to or near those record levels .

Therefore, I prefer the " exploitation from low to high" strategy. I'm just trying to take advantage of a quick bounce.

Okay, Rick. Okay, let's take a look at the technical analysis. As Charles just pointed out, it's clear you notice the trend when you look at the Valero chart. But we have a potential buying opportunity on the dip. What do you notice in technical analysis?

After this quick look at the diagram, we can now discuss it seriously. The rising wedge pattern, where the two boundary lines converge, appears to have been broken at this point.

Typically, this is considered an indicator of a downward trend. I always say this with extreme caution, because the trend could change at any moment. It is not certain that the price will decrease.

In this case, it appears that we are pushing the price down the trend line. We have not yet been able to close the gap near 373 at the Green Line. We have reached the highest price level, 419.04.

So, we also saw a recurring ceiling here just below these levels near 351. Another old high also stands out near 320. These levels are somewhat far off at this point, but I am only pointing out the important horizontal levels as I see them.

Now, we have fallen below the five-day exponential moving average in dark blue , which coincides with the trend line. Therefore, the downward breakout may be more obvious than it initially appeared.

The 21-day exponential moving average in blue-green at 378 appears to have been a pivot point for us so far today. We recorded some of our lowest points of the day after this point, but we are still above this level.

Therefore, this stands out as another important level to monitor as the lockdown approaches. Regarding the Relative Strength Index ( RSI), we note that we have fallen below the trend line and below the 70 threshold, which represents the overbought zone.

So, the momentum began to wane somewhat . We are still above the 50 midline, but it has seen a slight dip at this point. Regarding trading volume, we have some clear points to consider.

One of them is here, from 298 to 311. Another is here, from 341 to 353. And also the point where we are now, perhaps the smallest, but still prominent on the chart, from 380 to 392.

So, if we go a little below 380, that will open the way for a retest of some of these old lows. Note also that we have seen a significant increase in trading volume recently, a relatively large trading volume during this upward wave.

It is also worth noting that there are buyers at these high levels of trading activity.

Good. Now, Valero's stock is down 2%, as we see oil prices fall to around $91 a barrel, Charles noted. It appears that the Saudi pipeline may be back in operation sooner than initially expected.