Monday, September 1, 2014

EUA Dec14: Will utility demand be able to counterbalance increased supply?

The EUA Dec14 moved in a relatively narrow range between 6.22 and 6.48 euro last week. Traders were away from markets on Monday which was a banking holiday in the UK. The first candle of the week formed a bearish engulfing with that from the Friday before, but the low volume didn’t support a bearish view. The price tested the 20DMA on Tuesday and the 30DMA on Wednesday. Latter proved a good support and turned the price back upwards. The weekly high was reached on Thursday. On the last day of the week many traders might have opted for taking profit and the price closed down 4c d/d.
The increasing trend seems unhurt, but there are warning signs: (a) the 6.50 level couldn’t be broken last week, (b) RSI is at 60 and (c) the auction volume will double from this week on. The question is if the demand from utilities would be able to counterbalance these hurdles.
The closest support levels are at 6.29 (20DMA), 6.25 (30DMA), 6.22 (last week's low) and 6 euro. To the upside 6.48 is last week's high and 6.51 euro from the week before.
The MACD crossed the signal curve last Monday giving a bearish signal.

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