The European carbon market rallied on Thursday morning reaching briefly €84,50, a level last seen in October 2023. However, the EUAs failed to hold on the gains ending the session at €82,66 almost €2 below the intra-day high.

The price for carbon has been consistently rising lately, having gained almost €20 since mid-December, tracking gas pricing. Furthermore, recent trading data showed that investment funds have been increasing their bets on higher carbon from nearly 1 million allowances in the week ending on 20 December to a massive 53 million allowances as of 24 January.

However, “ European carbon is set for a decline with technical indicators flashing signs that prices may have found a ceiling with futures overbought,” warns Bloomberg, referring, among others, to the Relative Strength Index (RSI). 

Yesterday’s rally pulled the RSI above the 70 mark, suggesting that the price for allowances was overbought or overvalued, generating sell signals and briefly decoupling carbon from gas and coal markets at the end of the session.