Carbon Emissions - Weekly

Carbon Emissions currently trading at around €60.45 per tonne. Looking at the weekly chart, we can see that the commodity has found some support around €51.08 and has now risen over 17% over the last two weeks. The key support here is still in the range of €48-€49, and carbon may still test those levels before traders re-analyse the longer-term outlook. As it stands, we are still in a bear market and we have seen short-term rises previously before further falls. Markets are often deceiving, trapping bulls in a bear market and vice versa. Most traders mainly follow support and resistance levels but when other factors such as geopolitics are also in play, then chart analysis can be meaningless for longer-term forecasts. However, chart patterns are fairly common and increase the odds for traders in either direction. The RSI has been suggesting that this market was heavily oversold in recent weeks, as a result, buyers have rushed in for a short-term profit. But as of yet, there isn’t enough clarity as to whether carbon has now found a bottom. As seen in late December, we saw a 16% rise in two weeks which then led to a further sell-off below the market’s 200-day moving average. The past two weeks have been quite similar to that of December, which relates to the point made above regarding patterns within markets. Therefore, next week should offer more clarity on whether bulls are now in this market for a longer period of whether they will cash in their profits once more. If we see another positive week next week then a push towards the 200MA could be likely, or respectively, €66-€67. Even though the 200MA is a lagging indicator, markets have a tendency of gravitating back towards it before continuing/altering direction. It is where the supply and demand challenge each other until the dominant side takes the lead. With regards to the MACD, it remains negative but has flattened a touch.