Monday, June 23, 2014

EUA Dec14: Higher volumes and volatility expected this week

The gap of last Monday’s open was filled in in the first hours of trading and ceased to work as support. The price therefore fell to 5.65 euro after hitting a six-week high at 5.81 euro. Thanks to the price appreciation on Tuesday afternoon, the daily candle became a bullish engulfing and gave a positive sign for Wednesday’s opening. Also the 20DMA crossed the 200DMA on Tuesday, strengthening the bulls further. The EUA Dec14 hit a new local high at 5.82 euro on Wednesday, but failed to maintain gains. Some market participants interpreted as a negative sign that the price was not able to stay above the 100DMA, but it is more likely that the upper Bollinger band reversed the price appreciation. An impact assessment showed that an ambitious energy efficiency target within the 2030 climate and energy targets would keep the EUA price low for a prolonged time. The price fell further on Thursday, after the assessment leaked, amid low liquidity near the 5.60 euro level that was a strong resistance in the first week of June. 5.55 euro proved a good support on the last two days of the week and turned the price back upwards on Friday. The last candle of the week forms a bullish engulfing with Thursday’s candle, which makes us optimistic for this week. 

This week might be more exciting, volumes and volatility might be higher again as politicians in Brussels will be active. Political groups within the European Parliament are expected to be established. The biggest question is whether there will be a new group of far right / euro-sceptics and how many MEPs will opt for staying independent. (A new group can be formed by 25 MEPs from 7 countries.) 

Opening might be sleepy on Wednesday as access to the Registry will be suspended in the morning. Transactions will be queued, the British Registry informed. The software will be updated by the European Commission to remove account detail from the Trusted Account List.

On the same day the European Commission will hold a discussion with a group of experts about the market stability reserve. 

End of the week will be busy again as the European Council will have a two-days meeting. The two main topics are: the appointment of the candidate for Commission President (a qualified majority is needed) and further discussion of the 2030 climate and energy targets. 

There will be four auctions this week (except on Wednesday) offering a total of 8 million allowances.

The positive mood from Friday's close continued today and the room is open until 5.82 euro (the high from 18th June), followed by the next resistance at 5.92 euro (the high from 24th April).

5.56 euro was a good support on the last two trading days last week and it is also a Fibonacci retracement level.

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