European Energy Markets:
TTF, German power moving towards bullish exhaustion
Last week it looked like the markets were topping out but price rallied on the back of rapid escalation between the USA and Iran.
In line with our in-house methodology we are now trying to establish how much higher it can go.
The TTF front-month contract is increasingly prone to a bearish correction as far as our algos are showing. With a strong bullish alignment in all tools, prices are likely to rally towards the psychological level at €60.00/MWh, which may act as a strong magnet and potential reversal point.
German Power is at the highest risk of a bearish reversal. Bullish momentum was stalling for a second session at the end of last week.
Overall, TTF and friends are seeing a risk-reward ratio increasingly skewed in favour of the bears despite the classical TA tools screaming bullish.
Watch out for bearish reversal candles on the daily chart near key resistance. This would be a neat setup for the market to move lower.
Keep an eye on the hourly chart. Bullish exhaustion will be reflected in increasingly shorter uplegs until the momentum fully runs out and we start seeing our first lower low and lower peak.
Henry Hub is now most likely seeing a bullish reversal after going lower as we expected last week. The market is bottoming out at its usual favourite mean-reverting spot (according to our algos).
Brent is best to avoid spec plays for now as the recent bull trend remains relatively weak and prone to false signals.
Get the full weekly analysis with actionable TTF insights directly to your inbox for free. Click here.
TTF Sentiment Benchmark
The market was predominantly bearish at the start of last week. But with the market edging higher last Monday, many traders found themselves on the wrong side of the market.
The pendulum now swung to the other side, with nearly 55% of the market taking a bullish stance at the start of this week.
But it is now that the TTF is increasingly closer to a bearish reversal zone. So bullish caution is advised near €60.00/MWh.