EMISS pulls back from technical resistance

European carbon emission prices are taking a hit today. EMISS trades over 3% lower on the day as higher usage of renewable energy and increase supply of carbon allowances puts pressure on prices. European Union plans to sell 530 million carbon allowances between 2021 and 2030 to rise €40 billion in funds for energy transformation. However, it looks like EU may front-load some of those allowances sooner, creating a near-term pressure on prices. Spot prices of carbon allowances sold by EU at EEX exchange dropped back below €70 per tonne.

Taking a look at EMISS chart at D1 interval, we can see that prices rallied over the past week or two an jumped from around €65 to over €74 per tonne. However, bulls failed to deliver a sustained breakout above the €74 resistance zone, marked with previous price reactions, previous local high and 200-session moving average (purple line), and the commodity began to pull back. As a result, a double top was painted in the €74 area. Neckline of the pattern can be found in the €65 zone, and a break below could pave the way for a deeper drop. Textbook range of the downside breakout below the neckline suggests a possibility to a move to as low as €56 per tonne, what would be the lowest level since mid-March 2024.

Source: xStation5