Monday, June 15, 2015

EUA Dec15: Low volumes and range bound trade indicate start of summer

Despite opening below the 20DMA last Monday, the EUA Dec15 gained 4 cents to close above the moving averages. The benchmark contract held on to gains on Tuesday as well with a spectacular rally when the price hit a new three-weeks high at 7.63 euro.

Tuesday daily high has been retested on Wednesday and even hit a new three-week high at 7.64 euro after appreciating the whole day long.

After four consecutive days of gains the EUA Dec15 took a brake and closed 8 cents lower, at the daily low on Thursday. The price fell to 7.52 euro Friday morning, but later in the day the benchmark contract reversed losses and closed the day and the week at its highest point.

Last Friday’s close suggests that despite the negative investment mood around the world due to the Greek debt situation and the low volumes in the carbon market , the EUA Dec15 might be strong enough to retest the May high at 7.75 euro. If so, the price would return into the increasing trend channel it dropped from in May.

In tandem with last week’s appreciation the Relative Strength Index climbed to 60. There are still 10 points to reach the overbought territory, which might be still enough for the benchmark contract to reach the 7.75 euro level.

Should traders opt for taking profit, the first support level would be the 30DMA at 7.48 euro, followed by the 20DMA at 7.43 euro.

Looking at the chart from a longer perspective, the price moves sideways in the range between 7.18 and 7.75 euro for two months already (approximately since the compliance period ended). Lack of political news and summer holidays might keep the price in this range for the next weeks as well.

Source: Bloomberg L.P.

No comments:

Post a Comment