After Silver Wheaton’s 50 day moving average line bounced on its 200dma the stock seems to have formed an ascending triangle formation.

We were very pleased to see that the 50dma bounced on the 200dma as this is a very positive sign showing investor’s confidence in this quality silver stock. If it had broken the 200dma, if the blue line had fallen through the red line, then this would have been a very negative sign, technically speaking, for Silver Wheaton and probably would have sent the stock falling further.

As it happened, the bounced occurred and Silver Wheaton went on to rally a dollar or so. Silver Wheaton is one if the best silver stocks out there at the moment, in our humble opinion. Despite silver prices falling nearly 10% in the last few months, Silver Wheaton has managed to gain 10% and over the last 200 days, silver prices are up 17% whereas this silver stock has increased 35%, out performing silver bullion by a factor of two.

What remains to be seen is which way Silver Wheaton will break out of this ascending triangle. The stock is encountering resistance at around $12.00 and on the hypotenuse side of the triangle the base is around $11.30. A genuine breakout above $12.00 is of course a very positive sign for the stock as it could start forming an upwards channel. However a breakout to the downside could send Silver Wheaton down to $10.50 where it should find support on its 200 day moving average line, the red line.

Silver prices are up about 4 cents at the moment today, but it will take a more significant upwards move in silver prices to send Silver Wheaton and other silver stocks higher. We still see the precious metals such as gold and silver being fairly unexciting over the coming weeks, but we do see a rally towards the end of the summer which will send silver stocks flying as silver prices head towards are target of $20.

Silver Wheaton trades as SLW on the New York Stock Exchange and also on the Toronto Stock Exchange under the same symbol, SLW.