Monday, April 28, 2014

EUA Dec14: Will the 5 euro level wake up buyers?

The increasing trend experienced in the first half of April lost its momentum. Tuesday’s and Wednesday’s candles produced a tweezer top (short body with same high as prior candle) indicating a minor bearish reversal. The EUA Dec14 tested the upside and hit a local high at 5.92 euro last Thursday. The next day however saw the price plummeting from 5.75 to 5.50 euro within 3 minutes. 5.50 euro is the 30DMA. Bears dominated the market in late hours of the afternoon as well and the price fell below all averages, hitting a daily low at 5.04 euro and closing at 5.12 euro. 

MACD came closer to zero in the recent days, but Friday’s move pushed it deeper down into negative territory. RSI is at 41.6 (neutral).

Looking at weekly candles, last week produced an inverted hammer candlestick indicating trend reversal.

Vanishing demand means missing support for the price now and after the price fell below all the averages on Friday, the room is now open for further depreciation. 

Market participants might, however, find prices below 5 euro attractive enough to purchase allowances, which could lead to a retest of the resistance levels. 

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