Wheaton Precious (WPM) Surges 3.98% in Two-Day Rally as Technical and Fundamental Catalysts Bolster Short-Term Bullish Bias

Wheaton Precious (WPM) has surged 3.28% in the most recent session, marking two consecutive days of gains with a cumulative rise of 3.98% over two days. This upward momentum suggests a short-term bullish bias, potentially driven by positive technical and fundamental catalysts. The price action, combined with recent volume spikes, warrants a deeper dive into technical indicators to assess the sustainability of this rally and identify potential reversal or continuation signals.

Candlestick Theory

Recent price action exhibits a strong bullish bias, with a two-day rally pushing the price above key resistance levels established in mid-August (e.g., the $96.7–$97.88 range). The formation of a higher high and higher low pattern implies a potential breakout from a consolidation phase. Critical support levels now lie at $96.58 (August 27 close) and $94.34 (August 15 low), while resistance is reinforced at $100.71 (August 29 high). A failure to hold above $96.58 may trigger a retest of the $93.98–$94.95 support cluster, which aligns with prior Fibonacci retracement levels.

Moving Average Theory

The 50-day moving average (approximately $94.5) and 200-day moving average ($87.5) are both significantly below the current price of $100.42, confirming a strong uptrend. The 100-day moving average ($89.5) is also undershooting, suggesting a multi-month bullish momentum. Crossovers between the 50-day and 100-day MA are not imminent, but the price remaining above both indicators reinforces the trend’s integrity. A breakdown below the 50-day MA would likely signal a shift in sentiment toward caution.

MACD & KDJ Indicators

The MACD line (12-day EMA minus 26-day EMA) has crossed above the signal line, indicating short-term bullish momentum. However, the histogram’s contraction suggests waning acceleration, a potential precursor to overbought conditions. The KDJ oscillator shows %K (3-day stochastic line) above %D (signal line), with %K nearing overbought territory (>80). While this may hint at a short-term pullback, the absence of bearish divergence between price and oscillator values suggests the uptrend remains intact.

Bollinger Bands

Volatility has expanded recently, with the price near the upper band ($100.71–$100.42 range). This proximity to the upper band, coupled with a narrowing of the bands earlier in August, suggests a potential breakout phase. A sustained close above the upper band could signal increased volatility, but a reversion to the middle band ($98.5–$99.5) may indicate profit-taking.

Volume-Price Relationship

Volume has surged on the recent up days (e.g., 2.01M shares on August 29 and 1.42M on August 28), validating the price strength. However, volume on the August 29 rally (2.01M) is marginally lower than the August 22–25 rally (1.18M–1.62M), suggesting a potential deceleration. A divergence between rising prices and declining volume may emerge as a cautionary sign in the near term.

Relative Strength Index (RSI)

The 14-day RSI has climbed to approximately 75, entering overbought territory. While this is not an immediate sell signal, it suggests a potential correction or consolidation phase. Historically, RSI above 70 in strong uptrends can persist for several days before retracing, so traders should monitor for a reversal below 70 as a key threshold.

Fibonacci Retracement

Key retracement levels from the August 5–15 low ($89.02–$95.87) to the August 29 high ($100.71) are at 38.2% ($97.8), 50% ($95.5), and 61.8% ($93.2). The current price is approaching the 38.2% level, which may act as a short-term resistance. A break above $100.71 could target the $103.81–$105.53 range, aligning with prior August 8–11 highs.

Backtest Hypothesis

A potential backtest strategy could involve entering long positions when the price breaks above the 50-day MA, confirmed by a bullish MACD crossover and a KDJ %K above %D. Stop-loss placement at the 50% Fibonacci retracement ($95.5) and take-profit at the 61.8% level ($93.2) would manage risk. Given the current RSI overbought condition and Bollinger Band proximity, the strategy should also incorporate a trailing stop to lock in gains if the price consolidates. This approach would validate the confluence of trend-following and momentum indicators, while Fibonacci levels provide objective risk parameters.