European Energy Markets:
That bounce may not save the bulls
Two weeks ago, the bulls were taking a breather. That breather turned into a deep downside correction. TTF, NBP, EUAs and German power bounced slightly at the end of last week. But our analysts see potential for more downside this week.
German power has been leading the charge lower. So keep an eye on that market to get a hint of what TTF might be doing early this week.
The key level to watch for all markets is the 61.8% Fib retracement. That’s usually how far downside corrections go. If we bounce here, the bulls retain a chance at continuing higher again. But that seems less likely, our proprietary algos and classic TA imply.
More likely is an eventual break below the 61.8% Fib retracements on Europe’s key energy markets. Below it, the bears would be fully in charge and likely unwind gains made over the past two months.
On the TTF, that key level is €49.54/MWh. On the NBP, it’s 118.69p/th. The key level for German power is €98.70/MWh (Fib already broke).
Below those key levels, the respective 200-day EMAs become the next targets.
Our methodology is now signalling the following for the TTF:
Speculative traders: A transition to a bearish trend is underway but spec plays are still best kept small due to the weak trend structure.
Physical Buyers: Slow down buying as deeper troughs are likely to form.
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TTF Sentiment Benchmark
Earlier bullish dominance did not survive last week’s breakdown. Bullish votes fell from 50% to 39.5%, marking an 10.5 percentage points week-on-week loss. The bears are in a narrow lead at 42.1%. A split this even typically flags an indecisive market prone to false breaks. That mirrors our algo’s and chart read, where the transition to a bearish trend is underway but a full-on reversal is only triggered below €49.54/MWh.