The first day of the week didn’t bring any new lows as traders were waiting for the outcome of the WP meeting on Tuesday. Disappointing news from the meeting, however, sent the EUA Dec15 to the new 2015 low we forecast last week.
The 6.61 euro was close to the 200DMA which managed to turn the price back upwards. In the next two days the benchmark contract moved sideways in a range between 6.66 and 6.90 euro mainly following the price of German front year power until the news about the proposal of a 2021 start of the MSR which made the EUA Dec15 fall below the 200DMA, to a new 2015 low at 6.43 euro. With this move the price fell below the increasing trend line which started last autumn, and the decline continued Friday morning as well to 6.28 euro.
The benchmark contract seems to have fallen into a vacuum without major support until 5.56 euro, the low from last October. There is only one local low at 5.95 euro and a Fibonacci retracement level at 6.11 euro before that level.
There are two factors which could support the price this week:
(1) any positive news that suggest a more ambitious MSR design than the last proposal of Latvia and
(2) the relative strength index (RSI) is close to oversold territory which might be a signal for a correction.
The first major resistance level the price has to overcome is the 200DMA at 6.60 euro.