Carbon as a market has been following very closely technical signs in 2018. European Commision introduced Market Stability Reserve (MSR) a policy that aims to reduce the surplus of carbon allowances we are currently seeing in this market.
This analysis argues that EUAs tested the 21.40 three times but failed to breach it. That said, the triple top formation never occurred and therefore an inverse head and shoulders have provided the necessary upward pressure. Technically this market could test in the short-term its recent high.
Fundamentally, MSR kicks in next year and traders will be looking very closely to see how this instrument will affect this market. The demand of those allowances will play the most important role.
All these are just my thoughts and observations for education purposes. This is not an investment advice.
Happy to hear yours.
L
This analysis argues that EUAs tested the 21.40 three times but failed to breach it. That said, the triple top formation never occurred and therefore an inverse head and shoulders have provided the necessary upward pressure. Technically this market could test in the short-term its recent high.
Fundamentally, MSR kicks in next year and traders will be looking very closely to see how this instrument will affect this market. The demand of those allowances will play the most important role.
All these are just my thoughts and observations for education purposes. This is not an investment advice.
Happy to hear yours.
L