Monday, December 21, 2015

EUA Dec16: MACD slipped into negative territory

Despite falling to a new two-month low after the weak auction result, the EUA Dec16 rebounded Monday afternoon. The RSI, however, remained below the crucial 30 level, suggesting a potential bullish reversal. In addition, the price was still below the lower Bollinger band at 8.32 euro.

After some initial hesitation the EUA Dec16 climbed higher in Tuesday’s trading and finished 1.5% above Monday’s settlement price. The price closed above the Fibonacci level at 8.25 euro, but below the next Fibonacci level at 8.34 euro and the 100DMA at 8.36 euro. Despite the appreciation, the price was just slightly above the lower Bollinger band

After a relatively calm day, investors started to exit positions in the last 40 minutes of trading on Wednesday. Nobody wanted to caught in a position before the rate decision of the US Federal Reserve which was expected to increase the volatility in the EUR/USD and through the FX also in commodity prices and by the end of the day in the price of EUA.  As a consequence, the 20DMA crossed the 30DMA providing a bearish signal.

Thursday morning the EUA Dec16 reacted with declines on the Fed decision as the stronger dollar pushed the dark spread lower. The last auction of the year, however, brought buyers to the market. The benchmark contract reversed its direction and jumped to a daily high at 8.24 euro. The happiness about the strong auction though vanished by the end of the trading.

The benchmark contract moved in an intraday range f 18 cents on Friday and remained under pressure. Brent falling to new record low pushed other commodities down as well. The price fell to the lower Bollinger band at 8.05 euro first and recovered by the end of the day to close just one cent below the settlement price from the Friday before.

The technical picture looks gloomy with the MACD in the negative territory and the 200DMA luring the price to 7.92 euro. The RSI at 33 points, however, suggests that the price is close to oversold territory and might climb higher. Should the lack of auctions support the price, the 100DMA at 8.37 euro might stand in the way of appreciation.

Source: Bloomberg L. P.

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