Friday, February 24, 2012

Short covering and Fibonacci provides the support

Late last night carbon (EUA Dec12) slipped to 8.65 euro, as (most probably) few stop loss orders were triggered. After that, market immediately recovered 20c, but overall closed some 3% below the previous day.

Today the market was very strong, ahead of the weekend. Late last night recovery and close @ 8.86 didnt actualy create any new significant low, but it gave a bit of a bearish feeling. However as the market didnt really dip today, we saw a steady rise and a rally towards the close.

Reason: the one coming to my mind is - with no significat reverse in the price, those who went short around 9.40 last week and this week were closing out their shorts ahead of the weekend just to make sure they are not caught up in higher market on Monday if there are any sensitive news coming out in the weekend, whether about a set-aside or some macroeconomic comments, etc.

On the bigger picture, Fibonacci level of around 8.72 provided good support, which was confirmed today, paving a way to possible further gains next week.

No comments:

Post a Comment