Monday, June 22, 2015

EUA Dec15: MACD warns of further possible losses

The week started in a negative mood after talks between Greece and its creditors were halted after 45 minutes last Sunday. The EUA Dec15 opened at 7.64 euro, the closing price from 12th June, but was not able to break this resistance level.

The EUA Dec-15 contract continued its correction from the 7.64/t resistance level during Tuesday’s session. The bellwether contract closed at 7.45/t, some 0.10/t lower than the previous close amid the Greek debt crisis worsening.

Intraday volatility declined further on Wednesday when the benchmark contract moved between 7.44 and 7.54 euro. Opening (7.49 euro) and closing (7.50 euro) prices were close, suggesting hesitation of the traders about the future direction of the price. On the positive side, the contract managed to remain above key support levels at the 20 and 30DMAs at 7.43 and 7.48 euro, respectively.

Thursday saw a good start to the day after the euro appreciated versus the US dollar which lifted the front year German dark spread near 4 euro again. In addition, analysts at Bernstein told Bloomberg they expected the EUA to jump to 13 euro this year already. The weak performance of the German dark spread due to the appreciation of European coal prices, however, put a pressure on the EUA Dec15 price which closed at 7.48 euro, just one cent above the daily low of 7.47 euro. All in all, the price moved in an extremely narrow range of 6 cents and the volume traded hardly surpassed 4 million. Still the movement was enough for the MACD to cross the signal curve giving a bearish sign to those traders who didn’t leave for holidays yet.

The benchmark contract opened at the psychologically important 7.50 euro level on the last trading day of the week and slid continuously during the day. It even dropped shortly below the 20DMA at 7.44 euro and closed the day and the week exactly at this critical level.

The benchmark contract took a downward path last week (confirmed by the MACD crossing the signal curve). Should it continue into this direction, after touching the 7.37 euro local low from 8th June, the price has the room open until 7.20 euro. Should the bulls take over the floor thanks to speculation on new documents from Brussels, the 7.64 euro level will be the first major resistance to overcome.

Source: Bloomberg L.P.


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