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EU Carbon to Rally After Crossing Stochastic: Technical Analysis

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Dec. 2 (Bloomberg) -- European Union carbon permits advanced after crossing so-called stochastic indicators, and may rise further, according to Orbeo.

The slow stochastic oscillators “crossed over yesterday” providing a buying signal to the market, Carine Hemery, a Paris-based analyst at Orbeo, a carbon venture between Societe Generale SA and Rhodia SA, said by telephone today.

The oscillator measures the closing price of a security relative to its highs and lows during a particular period to try to predict whether prices will rise or fall. The chart signals an increase when its “k-line,” based on a formula that uses the highest and lowest prices in a set period, climbs above its own moving average, or “d-line.”

EU permits for December gained 16 cents, or 1.1 percent, to 15 euros ($19.79) a metric ton as of 10:15 a.m. on London’s European Climate Exchange. Permits hit a two-week low of 14.76 euros on Nov. 30. The next resistance level is 15.07 euros, Hemery said, citing patterns in previous price moves.

In technical analysis, investors study charts of trading patterns to predict changes in prices.

To contact the reporter on this story: Catherine Airlie in London at cairlie@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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