Q4 '06 is a funny product, it is quoted in the journals but tends not to trade much as a product, as a derivative of Winter 06 it tends to have its own little life inside of Winter 06 vying for attention from its more volatile neighbour Q1.

Looking at the Winter 06 graph there appears to be some resistance at around £50/MWh. So players looking to buy Winter 06 will be looking to see if the sell off in the next couple of weeks, will see it threatening this level. Q4 '06 has reached a new low see graph, and some may be tempted to buy in at these levels now. It is clear that the Winter 06 is the key driver and Q4 may well have a bit further to drop, but no one can deny that buying at new lows has to be a good trade, and perhaps if one was completely exposed to Winter 06 now may not be a bad time to look at buying it.

Risk limits will be getting wider as volatility is decreasing and so players are prepared to risk more, because the size of the potential spike looks to be less. This should increase liquidity and this can only be good for the market.