Vertis – The EUA Dec17 lost 7 cents or 0.9% on Monday as traders took profit from the rally the previous Thursday and Friday. The price opened with a 3 cents gap down, but it was still able to increase to a daily maximum at 7.82 euro in the morning. After the weak auction (cleared with a discount and with less bidders than last week) the benchmark carbon contract turned lower and hit a daily minimum at 7.68 euro. The price remained under pressure until the end of the day and it closed just two cents above the daily minimum.

Tuesday morning, the EUA Dec17 declined sharply to hit a local minimum at 7.56 euro. The unexpectedly strong auction however lifted the price back to 7.74 euro, but gains could not be maintained and the price slipped back down. The decline accelerated towards the end of the day. The price closed 11 cents (-1.4%) down.

The EUA Dec17 retracted the losses from the previous session on Wednesday, lifted by a strong UK auction clearing 4 cents above the secondary market price. The bellwether contract closed at 7.70 euro, up 0.11 euro from the previous close. A solid 20.7 million allowances changed hands on ICE.

The EUA Dec17 eased on Thursday. The contract touched the intraday high at 7.72 within the first minutes of trading, but turned sharply lower in the second half of the day. The benchmark contract closed the day with a loss of 17 cents. The volume traded was just half of Wednesday’s volume.

After opening in line with Thursday’s settlement, the EUA Dec17 touched briefly the daily minimum at 7.45 euro. In the second half of the day the price seemed unstoppable until it touched Thursday’s maximum at 7.72 euro. The price managed to gain 2% in a daily comparison, and to limit weekly losses to 1.2%.

The front year carbon contract seems to trade comfortably between the 7 and 8 euro levels. The technical indicators do not provide any signal. We therefore expect the price to keep the above range this week as well. The relative strength index is in the neutral territory (55), while the price oscillates near the mid-Bollinger band. The 20 and 30DMAs proved good support levels in the recent weeks and should keep this role this week as well. From the upside, last week’s maximum at 7.82 euro and the October high at 8.05 euro will be the resistance levels.

Source: Bloomberg, ICE