Monday, May 26, 2014

EUA Dec14: Thin volumes expected for this week

The EUA Dec14 fell below the local low at 4.72 euro that proved a good support earlier and hit a new local low at 4.65 euro last Monday. By the end of the day the lower Bollinger band stopped further depreciation and the RSI (33) came also close to oversold territory. 

Last Tuesday started with a new May low at 4.63 euro, but buyers took over the trading floor in the afternoon after the director general of climate action didn't exclude the possibility of an early implementation of the structural reform called market stability reserve. The benchmark contract booked a 3% increase by the end of the day. 

The positive mood survived Wednesday as well and helped the EUA Dec14 breaking the 5 euro level. The 20 DMA, however, stopped the price at 5.23 euro. 

Thursday’s doji candle showed uncertainty of market participants about the chances of further price appreciation. 

The price couldn't hit a new high on Friday, with the daily high of 5.28 euro being 6 cents below Thursday’s high. Other negative sign is that the price fell below the Fibonacci level at 5.12 euro in the morning. Despite opening in a positive mood on Friday, the benchmark contract showed signs of fatigue in the afternoon and closed below the 200 and 30 DMAs. On the positive side, the MACD crossed the signal line again, giving some hope to optimistic market participants.

This week will be characterized by intensive news flow thank to the Carbon Expo starting on Wednesday, but thin volumes due to public holidays across Europe.

If messages from the Carbon Expo are positive, the price has to fight the 20, 30 and 200 DMAs first (at 5.18, 5.30 and 5.32 euro, respectively). The next resistance level can be found then at the local high from 24 April at 5.92 euro.

If the price falls below 5 euro again, the price might retest last week's low of 4.63 euro.

Monday, May 19, 2014

EUA Dec14: Left the range for the downside

Contrary to the week before, last week’s volumes were again at more or less “normal” levels. Monday’s and Thursday’s candles still kept the hope alive that the EUA Dec14 can stay above the 200DMA. For a short time the price broke even the 20DMA hitting a weekly high of 5.45 euro. Wednesday afternoon however sellers took over the trading floor and pushed the price below all moving averages. The 38.2% Fibonacci retracement level kept the EUA Dec14 from falling further and the price closed at 5.16 euro, just one cent above the daily low. Bears collected even more power during night and pushed the price below the Fibonacci level and the psychological level of 5 euro on Thursday. The EUA Dec14 fell to 4.72 euro, a level not seen since the beginning of April.

The MACD turned down deeper into the negative territory and RSI fell to 33, close to oversold territory which starts from 30.

In the lack of buyers the price can test support levels at 4.58 euro (23.6% Fibonacci level), 4.03 euro (local low from end of March) and 3.71 euro (2014 low hit 28th of March). 

Should buyers reappear in the market, the first resistance level to break is near 5 euro. After this the former support level at 5.12 euro waits for the price. 

Monday, May 12, 2014

EUA Dec14: Range bound trading after compliance

Any attempt to provide a technical analysis of last week’s movement might fail for two reasons: the price moved in a narrow range of 5.07 and 5.40 euro and daily average volume fell to the half of April’s average volumes. Monday’s candle actually defined the range for the whole week already and the candles became smaller and smaller by the end of the week. 

If we are looking for signs, then there are more of the negative ones. The 30DMA slipped below the 200DMA on Wednesday and the MACD crossed the signal line on the same day. Tuesday’s and Wednesday’s candles together form a bearish engulfing. The only positive sign is that Friday’s closing price came in slightly above the 200DMA. The RSI is at 47 (neutral).

The closest support levels are: the 38.2% Fibonacci retracement level at 5.12 euro and last week's low of 5.07 euro.

In a positive scenario the price has to combat with the 20DMA first (at 5.42 euro) and with the local high from end of April at 5.92 euro.

Monday, May 5, 2014

EUA Dec14: In the net of moving averages

Last week’s technical picture is difficult to interpret as volumes were not enough to confirm any signal technical indicators gave. 

The first days of the week provided a positive picture as the EUA Dec14 managed to break over the most watched moving averages, but the starting positive trend was annulled later in the week. The benchmark carbon contract closed on Monday on the 200DMA at 5.26 euro and started on Tuesday from the same level to close at 5.46 euro, above all moving averages. A new weekly high was reached on Wednesday at 5.54 euro, but by the end of the day the price returned to Tuesday's closing level. Trading volume was too low on Thursday (due to a public holiday in continental Europe) to give an interpretable sign, although the long-legged doji candle could have been a warning sign about hesitation of the market.

Friday’s close below the 200DMA should be interpreted as a negative sign. The European Commission said that less than expected credits have been exchanged for EUAs than expected which was interpreted by the market that installations would look for more credits in the next 12 months and demand for EUAs would be dented.

Today's open confirmed the negative picture, after the front year German power retested the 34 euro level in the morning hours after reaching 35.25 euro last week.

The MACD is still in the negative territory, but became a straight line in recent days. RSI at 44, neutral.

In a negative scenario, support levels can be found at 5.04, 4.58 and 3.71 euro. To the upside the EUA Dec14 will have a difficult task to break all the moving averages (at 5.28, 5.21 an 5.37 euro).