Thursday, January 26, 2012

A continuous rise of the carbon

Carbon had yet again proven to be strong, supported by a decent volume traded on the power market and other markets rising as well (Fed announcements of “exceptionally low rates” until late 2014 gave a boost to the wider financial markets).

Dec12 EUA traded within some 25c range, supported @ 7.57-7.60 but capped 7.80-7.82.














The price bouncing off the pivot point (orange line) could have been read as an entry signal for long position, however with a resistance levels being so close (R1 ~7.68, R2 ~7.83) and eventually Stop Losses located somewhere @ 7.40 and 7.30 the risk-return is not too attractive here.

Again long green closing candle – bouncing of the “pivot point” may imply a continuation of the trend tomorrow.

Wednesday, January 25, 2012

Closing Bell

Carbon continued to rally this morning, lifted by higher energy prices and large volume being traded.

EUA Dec12 found good support at 7.45-7.50. Any long positions opened yesterday should be good. But keep in mind, that carbon was advancing for a few days straight - profit taking actions ahead of weekend are possible to take place.

Tuesday, January 24, 2012

Closing Bell

After "choppy" morning, carbon price shot up. The signal to enter was breaking above 7.20 EUR. More cautious, risk-averse traders, would wait to see the price breaking recent high of 7.40 and buy in only on the break of this level.

Monday, January 23, 2012

Closing Bell

Carbon pulled back today testing the support at 7.00 EUR. The fall can be partially due to profit taking, after the price rally from last week. The last closing candle – green and on good volume – can spark some optimism and expectations for some gains tomorrow. However with some governmental EUA auctions taking place this week, and forecasts of rather mild weather (which can result in low energy demand) the upside can be limited.

Levels to watch are 7.20/7.15 (near today’s close on EUA Dec12) – 7.00 – 6.85 (for a support).

Friday, January 20, 2012

Carbon price advances

Carbon has been advancing all this week, on the back of rising power prices [price chart below] and increased hedging thereof.



















UK NBP gas prices - benchmark on the energy market - has risen this week as well [compare last 4 candles of the chart below], which could have given support for carbon. Gas power generation became more expensive compared to more pollutive coal generation.



















EUA Dec12 steadily climbed and stayed above 7.00 EUR, however the rally was stopped at a resistance level of 7.40 EUR. Shall 7.15 EUR (or even 7.20 EUR) support be held and the gas price continues to advance, we may actually see carbon breaking 7.40 and establishing new "highs" for this year.

Thursday, January 19, 2012

A look accross the Atlantic

To detach ourselves a little bit from the carbon market, let's have a look accorss the Atlantic on US stock market, in a broader perspective.

SP500
Since November the index is in a strong trend. In the middle of December it was well supported @ 1,208 points. Furthermore, in the beginning of January the index broke above 1,270 points establishing new high since beginning of December and was further supported at 1,285 - 1,290.














The index broke now a psychological barrier of 1,300 points and is now at critical turning point. Judging from an even wider picture, it may target 1,350 points.

Wednesday, January 18, 2012

Position closed out

Tuesday witnessed quite big volatility in the morning hours of trading, which was driven by expectations of higher power prices, which in fact didnt materialize until today (Wednesday) midday.
























Surpringly strong support above 6.70 on EUA Dec12 made us look with great caution on the short position. We decided to put a stop at the entry level, which was triggered today before lunch. The 6.90 level is being tested now as a support.

Meantime, Greece sold 1m EUA during its first auction this year reaching a clearing price of 6.76 EUR, which is slighlty above current spot market prices.

Monday, January 16, 2012

Short opportunity and Closing Bell

EUA prices went sharply down this morning, which can be the reaction to the downgrade accorss EU delivered late Friday by Standard & Poor. Slide below 6.90 EUR created a short trade opportunity.













Prices went down to touch 6.60 on EUA Dec12 contract for a shortwhile, seemed to have found a support at 6.70 (which is the previous year's lowest) but also were capped below 6.80 EUR today.













We carry the short position overnight, to see what tomorrow brings.

Friday, January 13, 2012

Closing Bell

Carbon was struggling to break higher and gave up the ground as the Friday's session was coming to an end. The psychological 7.00 EUR floor was broken and the Dec12 contract closed just below 7.00 EUR.

No confirmation for the break higher still didnt trigger the trade, and at the moment it doesnt seem like an opportunity with high chances of execution. There was actually a better chance to enter the market but it would have been very short lived.
























Carbon still didnt mark a new low below 6.85 - 6.90 a level which could potentially trigger a short trade; however a fat red closing candle could indicate this is the direction for the next week.

On the Forex market; EURUSD marked a new low since Autumn 2010 trading close to 1.2620 on the worries that many EU countries - including France with AAA rating - will be downgraded by Standard & Poor. EURUSD @ 1.2670 - acting so far as a support - can turn now into a resistance in this pair. Time will show.

Thursday, January 12, 2012

Market steady after EIB report

The previous trade recommendation wasn't triggered. The EIB report showed a sales of 12m units versus 20m expected, which should be bearish for carbon. However for time being the prices are supported at 6.90 EUR and seems this is the test for the breakout above 7.00 EUR.













At the moment it is unclear to see whether the potential risk is to the up- or downside. We would still look at buying the breakout above 7.25 EUR, but potentialy, there is a short oportunity if we fall below 6.90 EUR.

Tuesday, January 10, 2012

Colder weather gives support to EUA

Slowly and steadily, carbon broke today from the last month resistance of 7.00 EUR and established a base for further gains this week - which can be only overshadowed by the EIB report on their progress on sale of EUA from the NER300. The report is due tomorrow around 6pm.












Failing to break further above 7.37 EUR (top blue line) doesnt mean anything bad or bearish yet. Positive re-test of 7.00 EUR towards the close gives a pretty good support. Having said that - trade for tomorrow is to buy on the break above 7.25 with stop loss 6.90.

Monday, January 9, 2012

A quick "look back" at the December 2011

There have been three important "events" before the 2011 ended.

1. First was the marking of the new lowest level for the EUAs, which was 6.72 in the middle of December 2011.

2. Second was a vote by the Environment Committee of the European Commission over the amended draft of the Energy Efficiency Directive, which would give the EC the right to "withhold certain quantity of EU Allowances from Phase III of the EU ETS". The positive (pro) vote on this, provided a bullish signal (however very short-lived), but it was more like a "buy the rumour - sell the fact" behaviour on the market. What was more important to learn from this event, is that a lot of stop-loss orders were bit on the market and they pulled the price above 9.00 EUR ! (some 30%). This simply gives you the idea that there are still a lot of short positions even at this - relatively low - price level. This points out to the conclusion that some people expect the price to slip further down - however they may have their positions hedged using other (energy) markets or instruments. Everyone was selling into the rally and the year ended pretty much unaffected by the vote and the market reaction to it. There is a second vote on this on 28 February this year.













3. The EIB has started to sell EUA from the NER300 as a Dec13 contract, via exchanges and OTC. This gave additional supply on the already crowded market. On average that should add some 20m units of supply per month. First reports on how the EIB manages the sale should be out this week. More info on http://www.eib.org/about/news/ner-300.htm