Monday, June 30, 2014

EUA Dec14: The increasing trend unhurt, but trading might be range bound

Last Friday’s bullish engulfing helped the EUA Dec14 to appreciate further on Monday. The contract broke the 100DMA and hit an intraday high of 5.85 euro.  Thanks to the strong auction result the price tested the 5.92 level, a local high from 24 April, but failed to break it and fell back to 5.79 euro. The increasing trend that started mid-May remained unhurt. After testing the upside the price fell back to the 100DMA on Wednesday and the EUA Dec14 closed just one cent below the closely followed indicator. The benchmark contract traded in a narrow range of 11 cents on Thursday to close flat day on day. The candle looks like an inverted hammer, indicating that the market is trying to define a bottom. Friday’s close gives reason for some optimism again as buyers late in the afternoon pulled the price higher which closed near its daily high.

The technical picture is still positive. The increasing trend channel that started mid-May is still untouched although the steepness decreased in the last two weeks. Last week the 30DMA also crossed the 200DMA giving an additional signal of bullishness. The 5.93/6.00 euro level however proved a strong resistance in the last three months and without supportive news it might halt further appreciation this week as well. From the downside the moving averages might limit any decline.

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