DE30 with recurring price action pattern

• European markets trade lower

• DE30 once again tests 200-period moving average on H4 interval

• SAP reports 22% jump in cloud order backlog

European stock markets are trading lower on Thursday. Blue chips indices from almost every European country are pulling back with equities from Belgium and Austria taking the biggest hit. Swiss SMI index posts small gain as does the pan-European Euro Stoxx 50 index (EU50). Inflation is said to be the biggest concern for investors but it should be noted that market participants are also looking towards China, where property developer Evergrande may officially declare default as soon as this Saturday.

Source: xStation5

Investors can get a sense of deja vu when looking at DE30 in the morning. Price action patterns on European mornings have been very repeatable this week with the German index pulling back ahead of the session launch and testing 200-period moving average on H4 interval. Market reversed and moved towards the 15,500 pts area after each test of the aforementioned moving average . Breaks above this zone were limited by the resistance zone marked with 61.8% retracement of the downward move started in August (15,550 pts area). However, it should be noted that the index has been painting lower lows below the 200-period moving average and the average itself is downward sloping. As a result trading range gets wider but topside resistance remains unchanged. This suggests that bulls may be running out of steam and traders should be aware of a potential downside reversal.

Company News

SAP (SAP.DE) confirmed preliminary Q3 results. Q3 operating profit increased from €2.07 billion in Q3 2020 to €2.10 billion in Q3 2021. Revenue increased 4.7% YoY, to €6.85 billion, while cloud revenue was 20.7% YoY higher at €2.39 billion. Net profit increased from €2.00 billion to €2.05 billion. Current cloud backlog increased 22% to €8.17 billion. SAP maintained a full-year forecast expecting cloud revenue at €9.4-9.6 billion and operating profit at €8.1-8.3 billion.

Daimler (DAI.DE) announced that it has invested $172 million into a new Research & Development center in Beijing, China. Aim of the center is to accelerate localization of Mercedes-Benz brand products in the world's second largest economy.

Rheinmetall (RHM.DE) received an order from Dutch government for artillery ammunition. Exact value of the order was not disclosed but the German company said that it is in the "double-digit euro million range". Delivery is expected to take place in mid-2023.

SAP (SAP.DE) is trading higher today after the company confirmed preliminary Q3 earnings and maintained a full-year view. The latest downward correction exceeded the range of the previous corrections in the current upward impulse, posing a risk of trend reversal. However, drop was halted at the 200-session moving average (purple line). A near-term resistance zone to watch is marked with recent local highs in the €127.50 area. Source: xStation5