The EUA Dec14 lost 8.9% last week in a downward trend that hit its local low at 6.24 euro on Friday after falling below the 30DMA on Wednesday. MACD turned down as well, but it is still in a positive territory.
Friday’s last two (uptick) candles on the 10-minutes charts might have made us cautiously optimistic regarding this week as low auction volumes reduce the supply side of the market.
Monday started in a relatively good mood, the record cover ratio of the first EU auction affected by back-loading however had a short time positive effect on the price. The EUA Dec14 broke the 6 euro level at around noon time and didn't halt until 5.66 euro as plenty of stop-loss orders might have been triggered. This is close to the 61.8% Fibonacci retracement level at 5.63 euro. Prices below 6 euro, however seem to be attractive enough for some buyers and the afternoon brought some recovery to 5.96 euro.
The overall picture went bearish. The price left the increasing trend channel that started in January on 25th February. The benchmark contract traded in a range between 6.30-7.40 since then, but today it broke out downwards from this band. The next support level is at 5.45 euro (the 100DMA) followed by 5.21 euro (a Fibo level). The RSI was at 38 when the market closed today, so there is still some room for further depreciation.
In a positive scenario (if for example the extension of the Stop the clock proposal gets rejected by the ENVI on Wednesday and airline operators have to purchase urgently), the price might climb back above 6 euro.
The 38.2% Fibo level at 6.31 euro and 30 and 20 DMAs (at 6.66 and 6.77 euro, respectively) will be the resistance levels in this case.