European Energy Markets:
The majority is bullish. I’m not convinced.
We ran the weekly poll. 122 traders voted. 51% expect prices to go higher this week.
I get it. Sentiment shifts fast in this market and the bullish case isn’t irrational considering that the cease fire between the US and Iran isn’t going anywhere. But when I look at the charts right now, I see something different. And I think it’s worth slowing down before committing to more longs.
Here’s my read.
Consolidation. Across the board.
Trending conditions are weak on every major contract we follow (Henry Hub is the only exception). Tools are neutral and unclear, even on the hourly chart, which is usually where you’d expect to pick up early signals. Ceasefire hopes are fading. Participants are fatigued. The sidelined crowd is waiting for something to happen.
That something hasn’t happened yet.
In markets like this, losses come easily and gains are hard to earn. If you’re forcing trades right now, the market will find a way to take your money. That’s just what non-trending conditions do to active positions.
The one exception
Henry Hub is the only contract I’m watching closely this week for a strong move.
The downtrend has pushed to a forecast state of -12 on our proprietary algos in a non-trending regime. The further a non-trending market stretches in one direction, the more vulnerable it becomes to a sharp snapback. Three years of historical data puts trough formation between -11 and -13. We may be sitting right in that zone now.
Watch it. Don’t chase it.
I’m not calling a reversal. But I am saying the risk/reward on new shorts here is poor. Limited downside unless trending conditions suddenly resume. And right now, that looks unlikely.
TTF spec traders
Avoid new longs. Full stop. If you want to be positioned, use corrective rebounds to initiate or add shorts. But keep size small. This is not a market that rewards conviction right now. Wait for the market to show its hand before committing real size.
TTF physical traders
Hold off. The market is weak and vulnerable, but that doesn’t mean the bottom is in. Accumulating too early in a consolidating market is how you end up averaging down into a trough that keeps moving. Wait for clear trough formation before buying. Patience is margin protection.
My take
51% bullish, but the chart is saying wait. The majority might be right by Friday. But right now the setup doesn’t justify the risk of being early.
I’d rather miss the first 5% of a move than lose money trying to call the bullish turn that might never happen.
Have a good trading week.
-Marcello
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TTF Front Month gas outlook
- Weak trending conditions on every major contract. Tools are neutral and unclear.
- Losses come easily. Gains are hard to find.
- Neutral = €38 – 46.61/MWh
- Bearish = below €38/MWh
- Bullish = above €64.61/MWh (less likely)
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TTF Sentiment Benchmark
Bullish sentiment jumped sharply this week, from 36% to 51%. That’s a 15-point swing in seven days, and it’s the biggest bullish surge we’ve seen since late February at the start of the US – Iran war.
Strong bullish sentiment on a market that goes nowhere might trigger a downtrend if the bulls get cold feet half-way through the week.
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