Tuesday, February 28, 2012

Set-aside vote

The vote of the Committee on Industry, Research and Energy of the European Parliament (ITRE) on the ‘set-aside’ of allowances is scheduled for today between 10:00 and 10:30. After passing the EP ENVI Committee in December 2011 and several documents leaking out and indicating that the plans could be accepted by the ITRE as well, the positive outcome has a quite high probability. In this case we expect a positive market reaction which can push EUA price to levels above EUR 10.00.

Significantly bigger price appreciation is not expected as (i) there are lots of uncertainties regarding the details and (ii) market priced in already the effect of the ITRE approval. After the positive market reaction, therefore a period of consolidation or price decrease cannot be excluded. Additionally, pressure on the price might be reinforced later on by the publication of verified emissions data by the end of next month, March 31.

In the case of a negative outcome of today’s vote the price could plummet immediately below EUR 8.00.

by Bernadett Papp, (Vertis)

Friday, February 24, 2012

Short covering and Fibonacci provides the support

Late last night carbon (EUA Dec12) slipped to 8.65 euro, as (most probably) few stop loss orders were triggered. After that, market immediately recovered 20c, but overall closed some 3% below the previous day.

Today the market was very strong, ahead of the weekend. Late last night recovery and close @ 8.86 didnt actualy create any new significant low, but it gave a bit of a bearish feeling. However as the market didnt really dip today, we saw a steady rise and a rally towards the close.

Reason: the one coming to my mind is - with no significat reverse in the price, those who went short around 9.40 last week and this week were closing out their shorts ahead of the weekend just to make sure they are not caught up in higher market on Monday if there are any sensitive news coming out in the weekend, whether about a set-aside or some macroeconomic comments, etc.

On the bigger picture, Fibonacci level of around 8.72 provided good support, which was confirmed today, paving a way to possible further gains next week.

Thursday, February 23, 2012

Double Top

Carbon had a strong finish on Tuesday and was well supportted also yesterday at 9.20 euro. This was only broken towards the end of the session. Again, a red closing candle put us into bearish sentiment.

Prices failed to broke above 9.50 euro for a second time within a week - chart seems to be closing a double top formation which usually signals downward direction for prices.

At the moment carbon stays around 9.00 euro, supported by the trend line. Range for today is 8.70 (most recent lows) - 9.20 (yesterday's broken support).

Tuesday, February 21, 2012

(Not) so bearish ?

After a quite bearish ending of yesterday session (long red closing candle and close below 8.90). The market seems to be testing the previous support of 8.90 euro as today's resistance level (trading at 9.00 euro for a short time), bouncing of 8.75 euro (much higher than our expected support of approx 8.50 euro for today).

It's not a "game over" yet for today. Carbon can continue to climb along the trend line and eventually break out to the upside from the triangle it found itself now - however I would be more bearish than bullish today and see the risk to the downside.

Keep in mind allocation are happening accross EU this and next week. There can be certain supply entering the market soon.

Monday, February 20, 2012

SP500 follow up

This is a follow up on SP500


The index traded towards 1350 point (even broke it) - where was our profit target - and retreated to find new support 1336.

Breaking above 50-day moving average and further going back into the previously drawn channel (red circle in the right-top corner) could have been new entry point for long position, with a StopLoss @ 1329. Adding a -10 point trailing stop loss can help to lock-in gains as the market corrects.

Retreat from 3-month high

After strong start of this week, EUAs are in retreat from this year (and a nearly 3-month) high. Seems like the market is testing a support of 8.90 - just above the current level of a 100-day moving average. With an RSI around 70, many traders may take the opportunity to lock-in some gains from long positions (sell the lenght), as the market may seem overbought at the moment.

Support at 8.90 and resistance at 9.20 euro makes a very tight range for some intraday trading today (the actual trades being between 8.96 and 9.15).

Wednesday, February 15, 2012

Pull back and shoot up again

We didn't have to wait long to see the correction. The price didnt manage to climb above 9.00 EUR. It went back down some 1.20 EUR to find a support around 7.60 EUR. 7.63 EUR was a Fibonacci support level; please also mind that this level was marked on the previous ilustration as a possible support.

We saw quite positive rally yesterday, and we expected this to continue today at least towards 8.47 - 8.52 EUR, but the rally was capped just below 8.40.

We are now at 8.27, which yet another Fibonacci level - which can be now either support or resistance. Carbon continues to climb along a trend line, which makes us think the 8.27 will act as a support.

Thursday, February 2, 2012

Broader view on carbon

Since the EUA are gaining in value day after day, it is worth to have a broader view on the situation and look for the posibile mid-term directions.

(1) We see that since June carbon was moving in a wide bearish trend - with corrections. We had a bounce from 13.00 EUR , 12.45 EUR and 11.20 EUR levels. The last one was substantial as it lasted for 2 months and kicked back the EUA to 14.00 EUR.

(2) The price plummeted reaching all time lows of 6.30 EUR in December last year - trading with "ups and downs" (corrections) within the corridor.

(3) Recently market is experiencing healthy growth - supported by rising power prices and gas prices (which theoretically makes the more polutive coal power generation economically more attractive, creating demand for EUA).

Worth noticing is that during (1) the traders were rather looking for the peaks (heights) from which the market could reverse, whereas (3) seems like the market (players) found a bottom from which it can grow.
It can be confirmed by the "W" shape of the chart in the past 1.5 month.
Also the price broke above 50 day Moving Average (green light line) and on top of that broke out of the corridor.

Now, we have put three levels, which we believe can be crucial for further price development - they simply represent the resistance levels concluded based on historical price movements. There is also a 100 day Moving Average line drawn (red light line).

Please note the price is likely to meet the 100 day MA at the drawn resistance of 9.20 EUR, which can be hard to get thru. On top of that, if we continue like this until that level, most likely the RSI (Relative Strenght Index) will reach 70, value where most trades consider the market as overbought and would sell (whether to take profit or to open speculative short positions).

Time will tell - rather sooner than later.

Wednesday, February 1, 2012

Market Update

Carbon prices have further advanced and broke 8.00 EUR for Dec12 contract - trading towards 8.20 EUR. Technical indicators (prices reaching upper Bollinger band plus RSI at or above 70 level) suggested an overbought market, hence we saw a correction from this year's heights.

Prices found a support around 7.70-7.75 EUR, much higher than we expected (we saw a support around 7.60 and 7.45) and breaking throught a pivot point of 7.95 EUR yesterday and today is trading around second expected resistance level of approx. 8.35 EUR.