EUA Dec17: Technical picture turned bearish

Vertis – The EUA Dec17 was falling in four out of five days last week and lost 7.0% in a weekly comparison.

On Monday, the EUA Dec17 opened with a 3 cents gap above previous Friday’s settlement price. The price only increased one cent before starting to plummet sharply. (The 7.72 euro level stopped the price from increasing in┬áthree consecutive days.) The losses accelerated in the afternoon when the benchmark carbon contract hit a daily minimum at 7.46 euro. There was some recovery until the end of the day. The price climbed back above the 30DMA, but remained below the 20DMA and closed still 1.7% down. The traded volume of 17.6 million was above the November average of 14.5 million.

The contract continued its path downwards on Tuesday. The price opened in line with Monday’s settlement at 7.55 euro, but after hitting a daily maximum at 7.56 euro in the morning, it turned sharply lower. The price plummeted to a daily minimum at 7.41 euro and was not able to recover by the end of the trading session. The benchmark contract closed the day with a loss of 12 cents at 7.43 euro (-1.6%). The traded volume of 12.9 million remained below Monday’s volume of 17.6 million.

On Wednesday, the EUA Dec17 plummeted by 2.2%. After opening at 7.43 euro, the price declined continuously during the day. The losses accelerated in the afternoon when the price hit a daily minimum at 7.26 euro. The price settled just one cent above the daily minimum. The sell off pushed the 20DMA below the 30DMA which is a bearish signal.

After three days of losses, the EUA Dec17 turned higher on Thursday and gained 1.1%. The price opened with a one cent discount to Wednesday’s settlement price and hit a daily minimum at 7.21 euro (just one cent above the local low from 20 November). The strong auction result and the higher prices in the energy mix lifted the price in the afternoon. The benchmark contract finished the day at 7.35 euro, a gain of 8 cents. The resistance level at the 30DMA, however, could not be retested.

After the correction on Thursday, the EUA Dec17 continued its path downwards on the last trading day of the week. After hitting a daily maximum at 7.37 euro in the morning, the price slid continuously to 7.11 euro, a level not seen since the end of October. The price was not able to recover by the end of the day and finished the day 21 cents lower and with a weekly loss of more than 7.0%.

The technical picture turned rather bearish last week. The price fell below the 20 and 30DMAs and the MACD slipped below the zero line. The next support level is a local low at 7.09 euro, which is also a Fibonacci level. This level has stopped the price from declining on the last day of October already and if it does the same this time, the price would return to a consolidation zone between 7.10 and 8.05 euro, established since mid-October. If this level is not able to halt the decline, the price could fall to the local low at 6.77 euro.

Source: Bloomberg, ICE

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