Monday, May 26, 2014

EUA Dec14: Thin volumes expected for this week

The EUA Dec14 fell below the local low at 4.72 euro that proved a good support earlier and hit a new local low at 4.65 euro last Monday. By the end of the day the lower Bollinger band stopped further depreciation and the RSI (33) came also close to oversold territory. 

Last Tuesday started with a new May low at 4.63 euro, but buyers took over the trading floor in the afternoon after the director general of climate action didn't exclude the possibility of an early implementation of the structural reform called market stability reserve. The benchmark contract booked a 3% increase by the end of the day. 

The positive mood survived Wednesday as well and helped the EUA Dec14 breaking the 5 euro level. The 20 DMA, however, stopped the price at 5.23 euro. 

Thursday’s doji candle showed uncertainty of market participants about the chances of further price appreciation. 

The price couldn't hit a new high on Friday, with the daily high of 5.28 euro being 6 cents below Thursday’s high. Other negative sign is that the price fell below the Fibonacci level at 5.12 euro in the morning. Despite opening in a positive mood on Friday, the benchmark contract showed signs of fatigue in the afternoon and closed below the 200 and 30 DMAs. On the positive side, the MACD crossed the signal line again, giving some hope to optimistic market participants.

This week will be characterized by intensive news flow thank to the Carbon Expo starting on Wednesday, but thin volumes due to public holidays across Europe.

If messages from the Carbon Expo are positive, the price has to fight the 20, 30 and 200 DMAs first (at 5.18, 5.30 and 5.32 euro, respectively). The next resistance level can be found then at the local high from 24 April at 5.92 euro.

If the price falls below 5 euro again, the price might retest last week's low of 4.63 euro.

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