Monday, July 21, 2014

EUA Dec14: Cautious appreciation with halved auction volumes looming

The EUA Dec14 is moving in a slightly increasing trend channel. The four white candles from last week helped the MACD crossing the signal curve giving another sign for further appreciation. Friday’s candle however forms a bearish engulfing which might indicate a halt to the further appreciation or the start of a correction. 
The range between 5.40 and 6.24 euro was the comfort zone of the benchmark contract in the last two months. Auction volumes will be halved in August which might have a positive effect on prices, if the utilities are actively hedging. In the absence of the utilities the price might move sideways, as the ENVI won't start the negotiations about the Market Stability Reserve before the members return from their summer holidays. 
The RSI is still in the neutral territory (at 58).
The next resistance levels are 6.24 (last week's high)/6.27 euro (a local high from 24 March) and 6.54 euro (a Fibonacci level calculated from 2014 high and low).
From the downside 6.00 euro (a psychological and a Fibonacci level) and 5.90 euro (the low from last Thursday and also the 20DMA) can support the price. The 30DMA at 5.80 is the next level.

Monday, July 14, 2014

EUA Dec14: Looking for direction in the absence of major news

The candle from the 4th of July broke the slowly increasing trend channel and the close below 6 euro made traders more cautious. The MACD crossed the signal curve giving a selling sign. The depreciation continued on Monday and the price fell below all moving averages before stopping 5 cents above the 200DMA. After falling more than 10% the price started a correction on Wednesday and the two last candles formed a bullish engulfing. This was however only enough to start a range bound trading between 5.60 and 5.84 euros in the last three days of trading. RSI is in normal territory (52).
If the price breaks out of this range, the first resistance to break is at 5.93 euro and the strongest support is the 200DMA at 5.41 euro.
All in all, the technical picture is neutral at the moment.

Monday, July 7, 2014

EUA Dec14: The technical picture turned gloomy on Friday

Monday’s bullish start helped the EUA Dec14 hitting a new 3-month high, but the benchmark contract failed to break the psychological level at 6 euro. The momentum remained on Tuesday as well and the price broke the 6 euro level which was a Fibonacci retracement level and is also important from the psychological point of view. On Wednesday the price fell just for a short time below 6 euro, but hit a new 3-month high at 6.13 euro later during the day. After five white candles the RSI came close to 70, level indicating overbought prices and we didn’t have to wait for the reaction. Although the 20DMA crossed the 100DMA on Thursday, the price closed down 8 cents.

The slow upward trend that started mid-May was broken on Friday. The EUA Dec14 fell through important support levels: (1) 6 euro: was not only a psychological level, but also a Fibonacci retracement level, (2) 5.93 euro: a local high from 24 June, (3) 5.74 euro: the 20DMA, (4) 5.71 euro: the 100DMA.
Last Wednesday the Relative Strength Index was close to the overbought category (at 69), but it fell back to 50 on Friday and to 45.7 today.

The MACD crossed the signal line giving a further selling signal.

The next support levels are: (1) 5.40 euro: the 200DMA. Can be a strong support as the price was not below this level since the start of June, (2) 5.12 euro is the lower Bollinger band and also a Fibonacci retracement level, (3) 4.93 euro is the local low from 2nd June, (4) 4.58/4.63 euro is a local low from 20 May and a Fibonacci retracement level.

Beside the four auctions to be held this week there will be several events in Brussels ETS participants might find exciting. The chair of the new environment committee of the European Parliament (ENVI) will be elected on Monday afternoon. As the biggest party in the Parliament the European Peoples Party has the right to appoint the chair candidate. After several names emerged, the final candidate is Gianni La Via who voted twice against back-loading in the previous Parliament plenary. The Climate Change Committee will discuss the next carbon leakage list Wednesday afternoon and the second stakeholder consultation about the post-2020 carbon leakage list will be hosted by the European Commission on Thursday.

All in all, it is difficult to find any factor that could reverse the recent decline of the EUA Dec14 at the moment.