Late last night carbon rebounded from the lows to close flat on a day. This could have made the traders think that going short big time at these levels is not a good idea anymore. This morning we had a big jump, and a lot of stops were taken out. If you had a short below 7.20 - your stop should have been taken out as well.
Previous short term support - 7.70 EUR - proved to be resistance for now (see the chart at the bottom of the post). However carbon found a floor @ 7.20 and may continue to rise tomorrow. We are seeing a textbook example of testing the 7.20 support - resistance at the end of the day.
We would recommend to limit short positions size and perhaps tighten the stops. Large volume traded @ 7.10ish could indicate accumulation on the market with possible upside for prices.
ECB is expected to announce another rate cut tomorrow, which can spark buying accross markets (similarily as happened when the USD rate cuts were announced) providing short term support also for carbon (along the support line).