European Energy Markets:
Selloff loses momentum. But bears are not done yet
Some trading desks I spoke to last week were hoping for a return to a “normal” price-finding process in line with fundamentals. This is believed because the Iran war may now turn into background noise. Not sure I agree with that. We’ve onboarded more options desks than ever before over the past six months. Volatility may be a new feature of our energy markets.
TTF: Last week, the TTF front-month contract marginally corrected higher before testing support at €40/MWh again. This was in line with expectations. We are now at the €40/MWh key support. Downside slowed at the end of last week and the sentiment benchmark shows that the market is indecisive.
But our algos suggest bearish continuation today towards €38/MWh before we experience a bounce.
Our methodology is now signalling the following:
Spec Traders: Stay short-biased. Use strength to sell. Any rebounds are likely a correction, not a reversal.
Physical Buyers: Don’t rush. Wait for deeper capitulation—better value lies ahead.
German Power Front Year: Further downside is likely to be seen if prices breach below €91.51/MWh.
EUA: Bulls are starting to take profit on an early sign of reversal. In-house algos suggest that a bearish reversal is increasingly likely.
Brent: A bullish reversal could be seen if prices clear $75.81/bbl resistance on the hourly chart. If not, the next target for the bears is $68/bbl.
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TTF Sentiment Benchmark
Market participants are indecisive as price tests a key support level this Monday. This indecision is also reflected in the TTF price chart. But our algos show that bearish continuation is possible.
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