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Hugo in HTO Trading,

Dow Jones Industrial Average: Still making new highs although extremely overbought

Since the beginning of the year the US index gained over 11.0% and last week managed to rally more than 1.0% in addition the US index continues in a bullish phase since mid-May.

Last week the index rallied with a wide range and closed near the high of the week, in addition managed to close above the previous week high, which suggests a strong bullish momentum.

The wide range, wide-spread weekly candle with average volume is signalling that the upward move is still in play.

The stochastic is showing an extreme overbought market and is displaying a weak bullish momentum.

Dow Jones Industrial Average is holding above the 10-week moving average that should provide a good dynamic support for next week.

Expecting an upward move to a Fibonacci extension at 22,704 (scenario 1) on a break above the previous week high at 22,045 (scenario 2) or on a bounce from a key level at 21,160.