Wheaton Precious Stock Surges 6.26% on Bullish Engulfing Pattern as Buying Pressure Intensifies

Candlestick Theory

Wheaton Precious (WPM) has shown a bullish continuation pattern in recent sessions, with a 3.28% gain on the most recent day, extending a two-day rally that lifted the stock 6.26%. The candlestick structure suggests strong buying pressure, as evidenced by a bullish engulfing pattern on 2025-11-10, where the closing price ($102.31) surpassed the prior session’s high ($99.86). Key support levels are forming around $96.14 (2025-11-07 low) and $94.37 (2025-11-04 close), while resistance appears at $103.00 (2025-11-10 high). A breakdown below $96.14 could trigger a retest of the $92.80–$94.55 range (2025-10-27 to 2025-10-24), which historically acted as a consolidation zone.

Moving Average Theory

Short-term momentum aligns with the 50-day moving average (approximately $98.00–$99.00), while the 100-day and 200-day averages (around $95.50–$96.50 and $91.50–$92.50, respectively) indicate a stronger long-term uptrend. The price has remained above the 200-day line for over a month, suggesting bullish bias. However, the 50-day line is approaching convergence with the 100-day line, which could signal a potential slowdown in momentum if the 100-day line fails to rise. A crossover below the 50-day line might invalidate the near-term bullish case.

MACD & KDJ Indicators

The MACD histogram has expanded positively, reflecting growing bullish momentum, while the signal line (12-day EMA) remains above zero, supporting an uptrend. The KDJ stochastic oscillator, however, shows overbought conditions (K-line >80), indicating potential exhaustion. Divergences between the MACD and KDJ suggest caution: while momentum remains strong, the overbought KDJ may hint at near-term corrections. A bearish crossover in the KDJ (K-line falling below D-line) could precede a pullback to test support at $96.14.

Bollinger Bands

Volatility has expanded recently, with the 20-day Bollinger Bands widening to $95.50 (lower band) and $103.50 (upper band). The price is currently near the upper band, indicating overbought territory. A reversion to the 20-day moving average (~$99.50) would align with typical mean-reversion behavior. However, the recent expansion in volatility suggests the market may anticipate a breakout rather than a reversion, particularly if volume remains elevated.

Volume-Price Relationship

Trading volume has surged in the past two sessions, with the 2025-11-10 session recording 2.65 million shares traded—well above the 1.5–2.0 million average. This supports the sustainability of the rally, as higher volume confirms conviction in the upward move. However, the 2025-11-07 session (2.27% gain) saw relatively lower volume (1.67 million), raising questions about the strength of the prior day’s breakout. A follow-through rally above $103.50 on strong volume would reinforce the bullish case.

Relative Strength Index (RSI)

The RSI has reached overbought territory (>70), consistent with the KDJ indicator. While this often signals potential reversals, historical data shows WPM can remain overbought for extended periods during strong trends. For example, the RSI hovered above 60 for weeks during the 2025-04–2025-06 rally. However, the recent backtest results caution against relying solely on overbought signals—buying on RSI >70 yielded -19.2% returns (2022–2025). A drop below 50 would signal weakening momentum, while a retest of the 70 threshold could validate a continuation of the trend.

Fibonacci Retracement

Key Fibonacci levels derived from the 2025-04–2025-06 rally (high: $86.50, low: $69.00) suggest critical support at $76.20 (61.8% retracement) and $82.00 (50% retracement). The current rally from $92.80 (2025-10-27) to $102.31 implies a shorter-term 61.8% retracement target of $98.50, which aligns with the 20-day moving average. A breakdown below $96.14 (38.2% retracement) would increase the likelihood of a deeper correction toward the $94.55–$92.80 zone.

Backtest Hypothesis

The backtest of a strategy buying WPM when RSI >70 and holding for 10 days yielded a -19.2% return (2022–2025), underperforming the S&P 500’s -11.7%. This highlights the risk of relying solely on overbought signals in a volatile, momentum-driven stock like WPM. The strategy’s failure likely stems from market participants anticipating corrections after RSI peaks, leading to sell-offs rather than sustained trends. For example, the 2025-10-17 spike (114.36) saw an RSI >70 followed by a 7.85% drop. To improve outcomes, combining RSI with divergences in the MACD or volume patterns could filter false signals.