The German Index has been rallying up since the beginning of July. However, the sellers came back yesterday on news that the Trump administration is poised to further escalate its trade war with China.
The only factor that could be supporting the DAX is the confusion and the uncertainty in the UK over the Brexit process. The UK Prime Minister has been struggling to keep her promises made on the Brexit process and if her position is challenged, a new incoming PM could be a good thing for the Eurozone. This is probably one of the reasons the DAX moved higher last week all the way back to the €12,600 region and beyond.
The DAX has been in selling mode ever since it formed a double-top at €13,150 back in June. The selling finally stopped after the index reached a big support level at €12,160 a few weeks ago. The bullish correction that followed was halted yesterday after we hit an important resistance level at €12,640. The short term momentum of the index is strongly negative, with RSI below 30. This indicates increasing pessimism among investors and further decline for the DAX is expected.