For the best part of a year a consolidation pattern has been unfolding in the EUA (ICE ECX) contract, activity quietening down notably this year. Bears have proved unable to drive the market below key support and, now, an interesting upside break is in process.

The Commodity Specialist view

WEEKLY CHART - CONTINUATION:

The multi-month consolidation is changing character – early signs of a break upward are visible now.

The 38.2% recovery level remains first key resistance on this long term chart – a break above this and we can start calculating higher targets.

DAILY CHART – DEC-10:

Earlier in 2010 the key 50% retracement came under pressure more than once – bears were expected to win the battle but in the end they lacked the will.

In the Commodity Specialist Guide we have been keeping an eye on first key resistance around a small 76.4% bounce level and falling resistance line. This has now broken, providing an initial bull signal/ trigger.

A further move beyond the 15.17 08-Dec high would violate the previous pattern of falling highs and lows. Also note the bull channel top

projection around the same level, offering temporary resistance. Supports are offered by prior 14.04/13.60 highs – at this stage buyers on reasonable dips will ideally favour stops just below the 12.59 25-Mar low.

Mark Sturdy
John Lewis

Seven Days Ahead
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