$Dow Jones(.DJI)$ declined -1% during the week, several components like $Walt Disney(DIS)$ -3.3%, $Wal-Mart(WMT)$ -4.0%, $Nike(NKE)$ -2.7%, $Visa(V)$ -3.1% reversed in consistency with overbought conditions and the whole index validated the resistance indicated in the chart at $44.8K.
Since the index retraced from overbought conditions it’s worth watching if this is an early signal for the $S&P 500(.SPX)$ and $NASDAQ 100(NDX)$ , both mostly favored by the tech sector, specially semiconductors.
The Dow Jones’s direction for the week depends on the $44,445.1 central weekly level. Staying below this mark maintains a bearish bias with a target of $44,086.8, followed by $43,802. Notice that the weekly levels, displayed in the top left of the chart, are very close to each other. This narrowing range indicates that a "squeeze" is forming.
A squeeze like this typically precedes a significant price move, one that could break beyond the initial support or resistance levels next week (hence the consideration of $43.8K). It's important to note that this same condition is also present in the SPX and NDX, as we will explore below.
In the unlikely case that $44,445.1 is recovered, a potential bearish reversal could happen at $44,729.8, or even $44.871.1 considering the strength of monthly levels.
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