Monday, October 19, 2015

EUA Dec15 hit new three year high at 8.51 euro

After the EUA Dec15 reached the 2015 high at 8.43 euro Monday morning, traders decided to take profit and the price closed 5 cents below last Friday’s settlement.

The EUA Dec15 consolidated in a 6 cents range on Tuesday. The technical picture was neutral at the moment. The 2015 high at 8.43 euro has been tested once on Monday. With every new test, however, the level became weaker and weaker.

With a spectacular rally Wednesday afternoon the EUA Dec15 broke out from the narrow range it traded on Tuesday and in the first half of Wednesday and hit a new 3-year high at 8.47 euro.
The EUA Dec15 extended Wednesday’s gains on Thursday and hit a new 3-year record at 8.51 euro. After three days of rising prices, however, the benchmark contract ran out of the Bollinger bands which made a correction likely in the afternoon. After the recent rally, some traders might have opted for profit taking which pushed the price lower on Thursday and on Friday. All in all, the EUA Dec15 gained 0.5% last week.

The RSI remained in the neutral territory during the whole week, but came close to the overbought territory when the price hit the new record. At the same time, the upper Bollinger band at 8.48 euro limited further gains.

The negative trend in the German power and European gas prices exercises a pressure on the EUA price. The first strong support level is at 8.30 euro (closing price from last Monday and daily low from Tuesday and Wednesday). The next support level is around 8.18 euro, where several moving averages (20, 30, 50DMAs) meet.

The price might receive support from ADP negotiations in Bonn, falling coal prices and the lower auction supply this week. Should the price be able to expand gains, the former 2015 high at 8.43 euro is the first resistance, followed by the new record at 8.51 euro. Above this level two local lows from 2012 form resistance levels at 8.58 and 8.64 euro.

Last week we saw the EUA price reacting actively on changes in the EUR/USD. he European Central Bank will have a rate setting meeting this Thursday. Although no change in the current rate of 0.05% is expected, but during the press conference after the meeting the President of the Bank might hint on planned measures to boost the European economy which might move the FX pair and the carbon at the same time.

Source: Bloomberg L.P.

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