Monday, August 25, 2014

EUA Dec14: Taking a break before bigger volumes come

The EUA Dec14 spent most of Monday between 6.35 and 6.40 euro without taking any direction and forming a doji candle. Tuesday however bought a new 5-month high at 6.47 euro which was beaten then on Wednesday at 6.51 euro. Traders opted for profit taking on Thursday after the new local high was reached. Friday brought another doji candle indicating that the price is looking for direction.
6.50 will work as a resistance this week. Those who bought below or at 6 euro, might opt for taking profit. Two technical levels “meet” here as well. The upper Bollinger band at 6.487 and a Fibo level at 6.54.
By Thursday the RSI came close to 70 and on Friday it fell to 59 indicating that a downward correction might be in the cards. Although this week's five auctions will still offer the halved auction volumes, there will be one auction more than last week and from next week on auction volumes will double. The increased supply might exercise a downward pressure on the carbon price. The closest support levels are at 6.24 (20DMA), 6.19 (30DMA) and of course 6 euro.
The activity along the forward curve and significant volumes traded in EFP might be a sign of utilities returning to the market. In the case the increasing trend continues, the first resistance level after 6.50 is at the psychological level of 7 euro, followed by the 2014 high at 7.41.
All in all, we have a neutral view for the EUA Dec14 this week, but it is worth mentioning that any deterioration in the conflict between Russia and Ukraine or the eruption of the volcano Bardarbunga (seen as a risk not only by airlines but also by industrials) can modify the picture significantly.

Monday, August 18, 2014

EUA Dec14: New 5-month high reached on Friday

After the huge fall the week before, the first day of last week brought a correction to the carbon market and the EUA Dec14 climbed back above the 6 euro level (and the 20 and 30DMAS at 6.14 and 6.04 euro, respectively). 
The direction was not that clear on Tuesday, a simple doji was built, but the price adhered to the 20DMA. 
Wednesday was more exciting again as the strong UK auction and lessening worries about geopolitical tensions helped the price to test the 30DMA at 6.04 euro. It climbed to 6.27 euro in the afternoon and closed just 2 cents lower.
Thursday formed other doji candle indicating some hesitation before the resistance level at 6.36 euro which was finally broken on Friday.
The MACD crossed the signal curve on the same day. The RSI is at 62 which might make investors more cautious in the near future.
Strong auction results and/or military action in Ukraine might make the EUA Dec14 test the first resistance level at 6.42 euro (last Friday's high). The upper Bollinger band is at 6.45. This is followed by 6.54 euro, a Fibonacci retracement level.
If geopolitical tensions calm down, the price could retest the support level at 6.36 euro and the 20 and 30DMAs at 6.19 and 6.10 euro respectively. The most important support level is still the 6 euro. Below that 5.90 and 5.75 could stop a depreciation.

Monday, August 11, 2014

EUA Dec14: Reduced auction volumes didn't help to new highs

The technical picture worsened last week. The price was not able to hit a new high in the first half of the week and therefore the MACD crossed the signal curve on Tuesday and gave a sell signal. The EUA Dec14 fell from the increasing trend channel on Thursday.
The big breakthrough (in a negative sense) happened on Thursday when negative message of the ECB President woke risk awareness in investors. Mario Draghi detailed his worries about the economic recovery in Europe. The price fell below 6 euro which proved a good support until Thursday (it was not only a psychological level, but also a Fibo level and the low from the week before). 
The price of the benchmark contract fell further on Friday and hit a 3-week low at 5.75 euro when headlines reported that US aircraft hit Islamic State artillery in Iraq.
Other market participants attributed the fall simply to traders reducing long positions after the price was not able to hit new highs despite the reduced auction volumes in August.
It is difficult to find any support levels above 5.52 euro (the 200DMA). Last week's low at 5.75 euro could work as support this week. The lower Bollinger band at 5.62 euro could also maintain the fall. 
The first resistance level is at 6.00 euro followed by 6.13 euro and last week's high of 6.36 euro. 
The RSI on the other hand is still in the neutral territory at 48.

Monday, August 4, 2014

EUA Dec14: Cautious increase in the cards

The EUA Dec14 hit a new multi-month high at 6.29 euro on Monday opening the room for hopes for further appreciations. Tuesday however brought sellers to the market and the two candles from Monday and Tuesday formed a bearish engulfing that made market participants more cautious. The reduced auction volumes in August however provided a good support for prices in the secondary market and the price posted modest gains in the next three days. Although Wednesday and Thursday didn't bring any new highs, the benchmark contract reached 6.36 euro on Friday, a level not seen since mid March.
The technical picture is positive as the EUA Dec14 continued both in the short and mid-term increasing trend channel. The price touched the upper Bollinger band last Thursday and the RSI at 62 indicates that a correction might be in the cards, but overall the trend goes upwards.
First support is near 6.25 euro which was a good resistance level during the last week. This is followed by the 6.15/6.17 euro level, a multiple low from last week. The 6.00 euro level is still very important being a Fibonacci retracement level, a psychological level and the lowest price hit last week.
On the upside 6.54 euro is the next resistance (a Fibonacci retracement level) followed by the 2014 high at 7.41 euro.