Monday, June 29, 2015

EUA Dec15: Greferendum weighs on markets

The EUA Dec15 had a positive start to last week as the new Greek reform proposals caused optimism among traders. The carbon appreciated in tandem with the euro, the German front year power and dark spread. Gains, however, disappeared soon with the euro weakening back and the pushing the dark spread back to 3.80 euro. Balance was found around noon time at 7.45 euro.

In the lack of major news from the carbon or financial markets, the benchmark contract oscillated in a narrow range between 7.47 and 7.54 euro on Tuesday. The price closed 2 cents higher, which was enough for the 20DMA to cross the 30DMA from below giving a bullish signal to traders.

After visiting the 30DMA at 7.46 euro in the morning, the price rallied to the Monday high of 7.56 euro on Wednesday while the German economy minister Sigmar Gabriel was speaking in Berlin about the importance of keeping coal fired power plants in the system. The EUA Dec15 continued its sideways movement and fell just one cent compared to Tuesday’s settlement price.

The price rallied to 7.62 euro in Thursday’s opening accompanied by a significant volume which suggests that some stop-loss orders might have been triggered at 7.56 euro, which was the weekly high until now.

Difficult Greek negotiations with creditors overshadowed the performance of the EUA Dec15 on Friday, but the benchmark contract was still able to close the week with a modest gain of 0.7% w/w.

The end of negotiations between Greece and its creditors during the weekend worsened international investor mood significantly today in the morning. The EUR/USD started the day with a gap down, Asian stock indices fell sharply and the EUA Dec15 lost more than 4% in the first minutes of the trading session. The low from 28th of May near 7.20 euro which is a Fibonacci retracement level as well, stopped the depreciation for the time being. The next support level is the 200DMA at 7.01 euro. 

Below this level local lows from 14th April (6.76 euro and 13th March (6.28 euro) are to be tested.
In the case of a correction, the 30 and 20DMAs at 7.44 and 7.51 euro, respectively are the first resistance levels to be broken.

Source: Bloomberg L.P.

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