Friday, August 17, 2012

There is always a reason to party

We expected a rather quiet week, and were surprised by the market activity. Until yesterday’s close the benchmark EUA Dec12 contract appreciated 7.5% from last Friday. The first two weeks of August show an increasing trend channel. The MACD gave a buy signal 6 August already and reached the positive territory this Wednesday. The Relative Strength Index (RSI) that on the last day of July was at 30.6, is now at 60.49, but there is still room enough for further appreciation.

In the lack of regulatory news global market environment is influencing the carbon prices. In the beginning of the week oil prices were supporting carbon as Brent oil went above USD 115 due to a drop in output in the North Sea, supply worries in the Gulf of Mexico and a decline in US crude oil inventories. In addition, European power prices went up partly because of problems at a Belgian nuclear power plant.

After a correction on Wednesday the market got new impetus from German Chancellor Angela Merkel yesterday saying that her government would support ECB President Mario Draghi in saving the life of the Euro.

The EUA Dec12 managed to come over the 30-days moving average (at EUR 7.30), and yesterday it went over the 200-days moving average (at EUR 7.70) as well, but here a fight seems have started. The price tried to break this level on Tuesday and Wednesdays already and today it’s testing it back. This can be a natural step given the fact that on Friday market participants might close their open positions and after the price appreciation of the last couple of days some of the traders might put the profit into pocket.

EUR 7.70 (the 200-days moving average) and EUR 7.50 (a support level marked by the opening and closing prices of the last days) might support the prices in a correction. Should the positive trend continue (most likely next week), EUR 8.00 will be the first resistance to combat. This a Fibonacci and a psychological level as well.

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