Monday, April 27, 2015

EUA Dec15: More than 6% jump supported by German climate contribution plan and compliance buyers

A controversial German plan about coal fed power plants, dark spread above 4/MWh and compliance buying pulled up the EUA Dec15 price by 6.40% w/w above 7 euro.
Despite a weak open the EUA Dec15 jumped 28 cents from its daily low of 6.84 euro to 7.12 euro on Monday, breaking the 20DMA at 7.00 euro and a Fibonacci retracement level at 7.05 euro. The sudden jump helped the MACD crossing the signal line and climbing into positive territory. 

The appreciation stopped on Tuesday, when the price moved in a  narrow range of 11 cents and was not able to hit a new local high, but closed down by 5 cents. There might have been some profit taking after the rally on Monday. 

Wednesday’s candle is almost a doji suggesting hesitation of traders, but bulls returned to the market on Thursday, when the price hit a new two-month high at 7.31 euro. With breaking the resistance level at March high of 7.29 euro the price got into a vacuum until 7.52 euro, a Fibonacci retracement level. The contract filled then this vacuum until 7.40 on Friday.

The RSI was lifted to 62 which still leaves some room for further appreciation. Resistance levels are at 7.52 euro (a Fibonacci level) and at 7.90 euro (2015 high). As the technical picture looks positive at the moment, there is a chance that the benchmark contract appreciates further in the first days of the week. Especially, as compliance buyers and some traders speculating on the COREPER meeting on Tuesday might provide a support to the price. 

In the second half of the week we might see some profit taking as the support of compliance buyers vanishes and traders might close positions ahead of a long weekend in many EU countries. 

Source: Bloomberg Finance L.P.

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