European Energy Markets:
TTF bears are back but initial hesitation possible
Following great uncertainty surrounding the Strait of Hormuz, energy commodity traders seem to have made up their minds. That’s what our in-house algos show us.
The Dutch TTF, British NBP and German power markets have turned into a trending bearish regime with Friday’s sharp move lower. This raises the likelihood of a strong bear trend forming. This was in alignment with our expectations from last week. So I hope you weren’t surprised!
Many traders may now switch to trend following strategies now with greater downside risks expected. However, returning to pre-war levels remain quite unlikely for the time being.
On the TTF front month contract, we may see prices fluctuating around 200-day EMA for some time going forward as the market struggles to find an equilibrium between tight physical supplies and the de-escalation of the war. After a bounce, the bears could continue.
The push higher on EUAs was no surprise. As cautioned last week, a head and shoulders pattern is now completed. We start this week with a fresh upside target at €85.89/tCO2e.
- TTF spec Traders: Algos favour scaling into the downtrend as bearish momentum strengthens. Charts suggest to use rebounds to add exposure, not to call a reversal.
- TTF physical Traders: Slow purchases to benefit from falling prices. Some buyers may accumulate tactically at current levels or near the next trough.
Get the full weekly analysis with actionable TTF insights directly to your inbox for free. Click here.
TTF Front Month gas outlook
- The broader stance has now turned bearish. Technical tools have been aligned bearishly for some time, and the in-house algos have shifted into a bearish trending regime
- On the hourly chart, price is still trading within a descending channel, which keeps the near-term pressure to the downside.
- A rebound from €37.96/MWh remains possible, but any recovery is likely to be corrective only and capped near €46.61/MWh, the 23.6% Fib retracement.
- That keeps the bias firmly with the bears for a move lower over time.
This is the shortened free version available to newsletter subscribers. Contact us to get access to the full dashboard that includes alternative scenarios, multiple timeframes, trigger levels, quant signals, pattern backtests and much more.
Watch the full weekly analysis video here.
TTF Sentiment Benchmark
Sentiment turns sharply bearish as Hormuz reopens. Downside persists, but it’s unclear if tight fundamentals unwind fast enough. We do expect a bounce early this week off the 200-day EMA support before downside continues. If this doesn’t spook those traders that voted bearish, downside should continue thereafter.
Want access to the benchmark history? Contact us to get started with Clever Markets.