Thursday, November 29, 2012

EUA Dec12: Santa brings just a storybook

The European Commission announced the 29th of November, after the market closed that there would be no vote about the backloading proposal of 900 million allowances from Phase 3 auctions on the meeting of the Climate Change Committee on the 13th of December. The Commission only asked the Member States to indicate their positions on the draft amendment of the Auctioning Regulation.

The European Parliament and Council should first amend the ETS Directive giving the Commission the legal right to amend the Auctioning Regulation. Member States will vote on the backloading only once this legislative process is concluded and this decision goes for three months scrutiny to the Parliament and the Council as well. 

The announcement reduces the chances of the backloading being adopted any time soon to zero (Bloomberg New Energy Finances sees the earliest possible date of the adoption November 2013) and pushes prices lower on the slope.

The doji candle on Tuesday indicated some hesitation of the EUA Dec12, but the price found its direction Wednesday afternoon. After hitting the daily high at EUR 6.84 in the morning the price moved downwards the whole day long on Thursday. The declining trend accelerated (with a huge volume) in the last 30 minutes of the trading and the price closed just 3 cents above the daily low of EUR 6.55. 

The mid-term technical picture didn't change a lot. The MACD is in the negative territory and the Relative Strength Index (RSI) is near oversold territory at 33.1. The EUA Dec12 is still in the range of EUR 6.45-7.17 we got used to in the second half of November. 

Now it seems, however, more likely that it will break the range downwards. The 20 days moving average crossed its 200 days moving average yesterday from above.

The first support level is at EUR 6.45, but there is a chance to visit the all time low of EUR 5.99 again. I'm still searching for reasons that could help the price testing resistance levels again.

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