Fundamental analysis
I prefer working with technical analysis, but I´m very aware that a strong fundamental understanding helps me to achieve a more well-rounded perspective. By integrating key market fundamentals into my decision-making process, I can better anticipate price movements, validate technical signals, and improve my overall risk assessment.
Key Fundamentals I Work With:
- Weather Forecasts & Temperature Deviations – Weather conditions are a crucial driver of power and gas demand. I monitor short-term and long-term weather forecasts, temperature anomalies, and their impact on heating and cooling needs.
- Renewable Generation Forecasts – Wind and solar generation forecasts significantly affect power market pricing. I track production trends, capacity factors, and seasonal variations.
- Conventional Power Plant Availability – I analyze scheduled and unplanned outages, maintenance schedules, and fuel-switching behavior in coal, gas, and nuclear power plants.
- Gas Storage & Flows – Gas storage levels, LNG imports, pipeline flows, and infrastructure constraints are key indicators of energy security and market tightness.
- Hydro Reservoir Levels – In hydro-dominant markets, water reservoir levels and snowpack conditions play a major role in power supply.
- Interconnection & Cross-Border Flows – Electricity and gas flows between countries impact local price spreads and arbitrage opportunities.
- Emissions Markets (CO₂ Pricing) – Carbon pricing influences merit order changes and affects the competitiveness of coal, gas, and renewable generation.
How I work with fundamentals data
- Historical Data Comparisons – I analyze past market reactions to similar fundamental setups, identifying patterns that align with my technical strategies.
- Long-Term Averages & Deviations – I track key long-term fundamental averages (such as seasonal demand patterns, generation trends, and price baselines) and monitor their deviations to identify market imbalances and potential trading opportunities.
- Fundamental Grid & Delta Tracking – I like to use a structured "fundamental grid" where I can track deltas (changes) in key indicators, helping me validate trends.
- Market Sentiment Overlay – While technical indicators usually provide trade entry and exit points, I use fundamental insights to confirm their reliability and anticipate shifts in market sentiment.
By structuring my fundamental insights alongside my technical models, I ensure a data-driven, adaptive, and well-rounded approach to power trading.