Tuesday, September 3, 2013

Carbon price dives

After topping at 4.70 and stabilizing around 4.60 for 2 sessions, carbon prices dived touching 4.41 this morning.

The downward movement can be partially attributed to a technical correction. Market looks for support around 4.40 where 20, 30 and 50 day MA could eventually meet; now standing @ 4.45, 4.42 and 4.34 respectively). 4.40 - 4.45 euro can prove as a support, as it did back in late August; it is also 61.80 Fibonacci retracement level.
On the other hand, fundamental change in supply of EUA - namely, EU auction volume back to pre-summer levels + Poland adding some 3.6m units every week until mid December - could have bearish impact on the market, with traders making "extra room in their warehouses" to absorb any additional supply.

Despite the fact, the chart still looks bullish (no new local low), I believe failing to close above 4.40 could drive the price further down. Perhaps purchase @ around 4.40 with cautious stop loss could be a new trade opportunity here.

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