Thursday, October 25, 2012

Ascending triangle, 7.50 support tested

Carbon price is moving sideways for a long time now, narrowing the gap between highs and lows, forming some kind of an ascending triangle pattern. Still it faces strong resistance @ around 8.50 levels, which was attacked already 3 times since June.

Today we shall see a support of 7.50 euro to be tested. If it is held, we could the price appreciating again to break short term DMAs, which meet very close to each other @ around 7.80 euro

Fundamentally, the upcoming auctions of EUAs Phase III could also significantly influence the development of the carbon price.

Monday, October 8, 2012

Hanging man didn’t scare EUAs away from EUR 8 level

Thanks to the uncertainty related to the plans of back-loading allowances from Phase 3 auction the EUA Dec12 showed an increased volatility since the end of August.  Intraday swings of 50 cents are more and more frequent. In the last two weeks it moved in a range between EUR 7.50 and EUR 8.11, but it couldn't break out in either direction. The MACD curve became a straight line and the relative strength index (RSI) is in the neutral territory at 55 points since early September.

On the 1th of October a hanging man formation could be seen on the chart of the benchmark product indicating depreciation. The price fell until the 200 DMA at EUR 7.50 that worked as strong support and helped the EUA Dec12 to recover and the price tested the resistance at EUR 8 again. Last week’s appealing German dark spreads were also supporting the recovery.

Without important announcements or developments related to the back-loading the EUA Dec12 might trade in the range mentioned above (EUR 7.50-8.00) this week as well.

In a positive scenario (for example strong commitment to speed up the legal process of the back-loading approval) the price might reach EUR 8.50 as the EUR 8.11 is only a weak resistance level.

News about further delays, however, might push the price further downwards. The first support level below the 200DMA is at EUR 7.16.