The Dow Jones Industrial Index 30, (#INDU), has been trading with a strong bullish trend until the time of writing this article. The Dow registered a new high at 35,457 which will be its eighth weekly bullish candle. According to technical indicators, it is very overbought.
Observing the 4-hour chart, we can see that the Dow Jones faces strong resistance at the 7/8 Murray line located at 35.546. This level could act as a barrier and could prevent the continuation of the upward movement.
On a fundamental level, this week's data has shown that the US economy is growing solidly, inflation is still a problem, and the labor market is recovering. This has allowed the Dow Jones to remain solid and continue with its bullish streak.
However, it could be reaching a key level of technical reversal. The Dow is a few points close to touching the 7/8 Murray line. This zone represents a reversal and a change in the trend. Therefore, if it fails to break through 35.546, a turnaround could happen and the Dow Jones will fall to support at 35.156 (6/8).
The technical reading of the eagle indicator shows that the Dow Jones is in the overbought zone. Therefore, our perspective is to sell below the 7/8 Murray with the targets at the 38 SMA and the 6/8 Murray support located at 35,150.
Support and Resistance Levels for August 13 - 16, 2021
Resistance (3) 35,673
Resistance (2) 35,554
Resistance (1) 35,478
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Support (1) 35,408
Support (2) 35,307
Support (3) 35,187
