The DEC23 EUAs had a bearish start to the year, with the permits experiencing a 7.48% drop in the first week of January. The EUAs continued to decrease, reaching a low of 77.00 €/t, a threshold that had served as a support for prices since January 4th. Despite the low prices, the first Thursday of the year saw high liquidity with over 33 million allowances traded, making the volumetric low at 77 €/t an important support for prices. The 50 and 200 day moving averages were aligning around 83.50 €/t, serving as a potential first resistance for any bullish breakouts in the EUAs. However, even by Friday 6th, the EUAs were still below the 365 day moving average.
During the second week of the new year, the DEC23 EUA experienced a slight recovery, with a weekly increase of 3.19%. Prices fluctuated around the 100 and 365 moving averages, which were converging just above 79 €/t. These moving averages acted as a balance point for prices, which never dropped below 78.20 €/t in the previous week. Thus, the support at 77.00 €/t remained strong, as well as the previously defined resistance at 86.50 €/t.
The DEC23 EUA started to see growth during the third week of January, rising by 6.54% compared to the 13th of January. By the 20th of the month, the DEC23 had surpassed the previously established resistance of 83.50 €/t, reaching highs of 85.30 €/t. This marked an inversion of the short-term trend and a bullish breakout, with all weekly sessions appearing bullish except for the 16th. The upper Bollinger band around 88 €/t and the non-volumetric high of 94 € registered on December 12th were potential limiting factors for further price gains.
During the last week of January, the DEC23 EUA future saw a positive performance, gaining 4.88% compared to the previous Friday. On the 27th of the month, the EUA reached its highest point at 90.73 €/t, solidifying a bullish trend. After a slow start with a loss of over 3€ on Tuesday, the next two sessions showed a sharp recovery. On Thursday, the front-year contract saw a gain of over 5€, reaching a high just below 90€. The following day, it surpassed the 90€ mark. The lack of true resistances above 90€ could lead to a testing of the 100€/t level, if the permit is able to surpass 92.50€/t. The first support was represented by the 50-day moving average, which at the time was around 85.22 €/t.
Francesco Rogato
With his commodity trading experience, specializing in the energy sector, and extensive knowledge of European exchange platforms and Over-The-Counter markets, he brings his advanced analytical view on the EU ETS carbon market in a monthly short blog, “Let’s Talk Carbon”.