Bears Resist European Carbon MACD Buy Signal: Technical Analysis
2011-01-05 11:29:56.274 GMT
By Catherine Airlie
Jan. 5 (Bloomberg) -- Gains in European Union carbon
emission allowances may be capped after testing a strong
resistance level yesterday even as moving average charts send a
buying signal to the market.
The moving average convergence divergence line crossed
above the so-called signal line this week, according to an e-
mailed note from Orbeo. "It's a buying signal," Carine Hemery,
a Paris-based analyst at the Societe Generale SA and Rhodia SA
carbon venture, wrote in the report today.
Instances when the so-called MACD rises above the signal
line, a calculation of the nine-day moving average, are often
viewed by technical traders as a sign prices may rally further.
The last time there was an upward crossover was on Nov. 11,
which was followed by three days of gains.
EU allowances for December were unchanged at 14.43 euros
($19.15) a metric ton at 10:50 a.m. on London's ICE Futures
Europe exchange. The contract rose to as much as 14.45 euros a
ton today, matching yesterday's highest price, which came after
the biggest gain since Nov. 17. A failure to rise above this
level may indicate a fall in buying interest.
The market tested a strong resistance level yesterday and
the contract didn't break the bullish trend, Hemery said by
telephone. "Technically, prices could move sideways until there
is a fundamental change in the market," she said. Permits may
trade at about 14.45 euros today, according to the report.
That price "is a big level and we failed here yesterday,
so the bears did what was asked of them," Clive Lambert, a
technical analyst based near London at FuturesTechs said by
telephone. "We'd back them on this basis, classing this as a
selling opportunity for now."
Technical traders watch for patterns on daily charts, such
as moving averages and resistance levels, for clues to price
For Related News and Information:
December emissions price chart: MOZ0 <Index> GPO <GO>
Emission market news: NI ECREDITS <GO>
Top energy news, power news: ETOP <GO>, PTOP <GO>
European power-markets home page: EPWR <GO>
--Editors: Raj Rajendran, Rob Verdonck
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