The increasing trend channel that started mid-January remained intact last week as well and bulls received further impetus by speculators expecting the Parliament –plenary to pass the shorter scrutiny of back-loading. The EUA Dec14 hit a more than 1-year high on Thursday (shortly after the vote in plenary) at 6.74 euro. The huge rally from last week removed the price far away from moving averages (200DMA: 4.74 euro, 30DMA: 5.25 euro, 20DMA: 5.48 euro). The MACD is at highest level since July 2012 and the RSI at 79.9 indicates that the carbon is overbought at the moment. The above make justify our expectation for a correction.
In the lack of new highs former buyers might opt for tacking (at least part of) their profit and those industrial companies that are sitting on a surplus might reduce their expectations for prices at 8-10 euros any time soon and sell some allowances. Friday’s doji candle shows uncertainty of market participants regarding the next direction.