European Energy Markets:
TTF, German power likely to top out
The escalation in the Strait of Hormuz came and went. Markets (over) reacted and we might have now seen the end of it. Hoping for a return to “normal” energy markets is hopeless. Traders that blame the markets for being untradable will lose in the long term. Traders that evolve stand a chance to remain profitable.
TTF Front Month
Our proprietary trend exhaustion indicators show that there is still a little bit of room left to move marginally higher for the TTF before entering a bearish reversal zone. But we might have run into heavy resistance at the end of last week already.
We are watching the bearish setups on the hourly and daily charts closely. For instance, the hanging man on the daily chart and the head-and-shoulders pattern on the hourly chart all suggest that we have peaked out.
German Power Front Year
German power is very likely to be topping out in one or two sessions. German power markets are statistically unlikely to turn into a bullish trending regime. So the only way is down.
Henry Hub
Henry Hub, which is typically a volatile but very predictable market, has just seen a steep collapse last week after a long period of indecision. This is exactly why we have been advocating to our clients over the past month to avoid all spec trades during such times as they are pure white noise without any predictive value.
Trying to trade the smaller mean-reverting swings would have likely seen all your tiny profits wiped out in one fell swoop given the liquidity sweep last week.
There is likely something going on with Henry Hub. Based on recent market behaviour, the strengthening bear trend now has more room to go to lows last seen in Nov ’21.
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TTF Sentiment Benchmark
The bears are back in charge after a week of indecision. The Iranian LNG attack had a shorter impact than the initial price move last week would have suggested. Many traders are still in panic trading mode.
Bearish dominance this week is justified by classic charting analytics and our proprietary algos.