Monday, August 24, 2015

EUA Dec15: Last week of low auction volumes

After the rally the week before, last Monday’s black candle suggested that there might be a correction this week coming with the EUA Dec15 closing at 8.25 euro, 8 cents lower than the Friday before.

Tuesday’s doji candle, however, showed hesitation of traders. As the reduced auction volume supported the prices of the benchmark contract, it settled 3 cents higher than the day before.

With a spectacular rally after the announcement of the UK auction result on Wednesday, the EUA Dec15 reached 8.38 euro, a level not seen for two years.

Bulls dominated the trading floor on Thursday as well, when the price jumped to a new 2015 high at 8.43 euro. The gains, however, could not be maintained. The technical indicators suggested that the price became overbought and a sell-off on international markets started on worries the Chinese economy would slow down more dramatically than previously thought.

Despite the good auction result on Friday, the EUA Dec15 didn’t climb any higher. With the German front year power falling to a record low the carbon fell to a new weekly low at 8.13 euro and settled 2% lower on the last day of the week.

Although the relative strength index is in neutral territory after Friday‘s losses, other indicators forecast a correction the last week already. The chances for the correction are increasing also as the period of low auction volumes comes to an end soon and traders might purchase the allowances less actively.

Should the (global) negative sentiment push the price lower, the first support level is the 20DMA at 8.08 euro, followed by the 30DMA at 8.02 euro. The August low at 7.76 euro is the next support level after that.

The strongest resistance at the moment is the 2015 high reached last Thursday at 8.43 euro.

Source: Bloomberg L.P.

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