DAX drops below uptrend line

It was another bearish day for EU indices, and the German DAX was down more than 3% on Monday afternoon, trading at 12,700 EUR, which are one-month lows for this index.

Bulls have failed to push DAX above previous highs of 13,330 EUR, which looks like a major resistance for now. Instead, frustration crept into the bullish camp, and traders closed their long positions as the worldwide virus situation has deteriorated again.

On its way down, the index broke below the uptrend line from June's lows, which could be another bearish signal. The price is now testing previous lows near 12,600/700 EUR, and if this level is broken to the downside, we could see a larger decline toward 12,180 EUR.

Alternatively, if the US session brings dip-buying, we could see a rally toward the broken bullish trend line, which is near 12,860 EUR. As long as the index trades below this level, the short-term outlook seems bearish. 

Sentiment appears bearish as US elections loom and the COVID cases are rising sharply in many EU countries, which will most likely lead to more lockdowns and less economic growth.
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