Bottoming nicely out from 4.40, market started to climb on Wednesday afternoon, following the increase in power markets across Europe.
Closing the gap - as shown in the circle - provided the incentive for aggressive buying, which resulted in the rally being continued today, breaking most of the resistance levels there were (4.54, 4.64 - recent consolidation and 200 DMA - rather crucial level).
Bears closing their shorts helped to push the market higher and higher; we parked for a while @ around 4.74, before eventually topping around 5.00 euro. Volatility was good and finally we had a much wider trading range, compared to 10c during August, which may attract further attention of daily traders.
On the bearish side of the things; we have 4h RSI @ 80.72 ! and daily RSI @ 71.82 ! a Sign of an overdone buying spree. However, one or two days of consolidation between 4.75 and 5.00 can cool the RSI down a bit.
We also got to know final cross sectoral reduction factor for Phase 3 of the EU ETS and that the physical allocation should happen within 1 to 3 months. Additional 66m of 2013 allowances will be auctioned during the course of 2014.
All in all, I think we are up for another volatile day - if not a week - and i would expect gap on opening and chasing the market up again. Perhaps one could consider closing your long position on the rally.