It was great to see Silver Wheaton break up out of the ascending triangle formation it has been forming over recent weeks.

However it needs now to break the $12.50 level or else we could see a period of consolidation and range bound trading.

The technical indications of the Relative Strength Index also suggest a small fall is due. As you can see, the RSI is at 66.93, getting quite close to the sell zone that starts at around 70. In fact if we take a look at the history of the RSI for SLW we see that it has not been below 50 for over three months. So perhaps a small decline in price is in order, perhaps to the $12 level, where the top of the ascending triangle that once was a resistance could now become a support.

It would be healthy to witness some consolidation around $12.50 to $12.00, a tad of base building, before Silver Wheaton continues to move onwards and upwards.

The spark needed to ignite a new rally in this silver stock is most likely to be a rise in silver prices, which we see coming at the end of the summer, as the summer is a seasonally quiet time for silver, gold and the other precious metals.

Silver Wheaton trades as SLW on both the New York Stock Exchange and the Toronto Stock Exchange and is a BUY on our portfolio of silver stocks.