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.


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