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Do Price Barriers Exist in the European Carbon Market?

Author

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  • Fernando Palao
  • Angel Pardo

Abstract

It is generally thought that psychological prices in markets primarily traded by professional participants should play a limited role. The authors investigate the existence of key reference points in the European Carbon Market, which can be considered as a market with highly qualified stakeholders. They document the presence of key levels and barrier bands around European Union Allowances (EUA) prices. It appears that traders tend to consider these price levels as resistances in upward movements and as supports in downward movements. Furthermore, the authors have observed that the existence of price barriers affects both return and volume dynamics. Therefore, the results indicate that there exist certain EUA prices that do, in fact, modify the behavior of European Carbon Market participants.

Suggested Citation

  • Fernando Palao & Angel Pardo, 2018. "Do Price Barriers Exist in the European Carbon Market?," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 19(1), pages 111-124, January.
    • Handle: RePEc:taf:hbhfxx:v:19:y:2018:i:1:p:111-124
    DOI: 10.1080/15427560.2017.1366492
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    Cited by:

    1. Sattarhoff, Cristina & Gronwald, Marc, 2022. "Measuring informational efficiency of the European carbon market — A quantitative evaluation of higher order dependence," International Review of Financial Analysis, Elsevier, vol. 84(C).
    2. Zhou, Xinxing & Gao, Yan & Wang, Ping & Zhu, Bangzhu & Wu, Zhanchi, 2022. "Does herding behavior exist in China's carbon markets?," Applied Energy, Elsevier, vol. 308(C).
    3. Júlio Lobão & Natércia Fortuna & Franklin Silva, 2020. "Do psychological barriers exist in Latin American stock markets?," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 35(2), pages 29-56, October.
    4. Yensen Ni, 2024. "Navigating Energy and Financial Markets: A Review of Technical Analysis Used and Further Investigation from Various Perspectives," Energies, MDPI, vol. 17(12), pages 1-22, June.
    5. Narayan, Paresh Kumar, 2022. "Evidence of oil market price clustering during the COVID-19 pandemic," International Review of Financial Analysis, Elsevier, vol. 80(C).

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