Monday, September 15, 2014

EUA Dec14: MACD slipped into negative territory

As we wrote last Monday the technical picture worsened in the first week of September and things didn’t get any better last week either. The EUA Dec14 fought with the moving averages on Monday, but gave up in the days after and fell even below the critical 6 euro level on Friday to an intra-day low at 5.97 euro (here is the lower Bollinger band now). 
Market participants might have been waiting or comments from the Working Group on environment of the European Council on Monday as the price moved in a narrow range and the volume didn’t reach 10 million until 17:30pm CEST, but politicians told 30 minutes before the market closed that they would need two weeks to draft their positions. The German proposal leaked out later during the week suggesting a 2018 start only, one year later than the country’s position was in summer.
Coal prices in euro terms increased after the European Central Bank rate cut, while gas prices dropped as the EU delayed the implementation of new sanctions after the ceasefire had been signed in Ukraine. These led to the dark spread losing from its advantage relative to the spark spread since the beginning of September. As a consequence the EUA Dec14 got on a downward trend.
On Thursday the MACD slipped into negative territory giving another bearish sign for market participants. The only fact that could give some hope for a correction is that by the end of the day  the EUA Dec14 managed to climb back above 6 euro again. On the other hand, news reported today in the morning that the ceasefire didn't bring any solution and that fights in Ukraine continued during the weekend pushing gas prices up.

The RSI is at 41, so a retest of the 5.97 level cannot be ruled out. 6 and 5.97 are the first support levels followed by a local low at 5.75 from the beginning of August.
To the upside the first resistance is at 6.15 which stopped the price increase twice last week. The 30 and 20DMAs are the next resistance levels at 6.26 and 6.30 euro, respectively.
The price fell from the major increasing trend channel and turned down. In the lack of support the price might retest the 5.75 euro level, while to the upside the 6.15 euro resistance has to be broken first.

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