Monday, December 2, 2013

EUA Dec13: The calm before the storm?

The EUA Dec13 continued in its declining trend channel last week without bigger movements. 

Monday's EU and Polish auctions cleared near market levels. On Tuesday, the market tested the resistance level at EUR 4.50 which stopped further appreciation. Wednesday offered two "positive" factors that halted further price depreciation: (1) there was no government auction on that day, (2) Germany's coalition negotiations ended in a deal forming a government which would support back-loading (although not final cancellation of those allowances held back). Thursday and Friday saw a very calm trading as many market participants showed solidarity with US markets celebrating Thanksgiving and stayed away from trading.

Today's trading started in a sleepy Monday mood until the spokeswoman of the European Council announced to scrap planned vote and to approve whatever would be decided by the Parliament on 10 December. On the news price sky rocketed immediately from EUR 4.45 to a local high of EUR 4.73, a level not seen since 13 November. The euphoria, however, was short lived and half an hour after the announcement the price returned below EUR 4.60 again.

Today's upswing was not even enough to reach the upside of the trend channel, but MACD crossed the signal line. Further positive sentiment regarding back-loading could help the price to reach resistance levels at EUR 4.75 (upper side of the trend channel) and EUR 5.00.

In the lack of additional news about back-loading (or in the case of further NIMs / derogation plans to be approved by the Commission) the price might hesitate between EUR 4.62 (30DMA) and EUR 4.37 (200DMA).





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