Now that Greece officially requested assistance (read: bailout) from EU, some new details about that country financial shape are seeing the light of day. The European Union’s statistic agency reports some discrepancies between what Greek government claimed earlier and what is being discovered now. Differences could be a matter of varied accounting practises, rather than any deliberate deception, but it seems finances of that country are even a bigger mess than previously believed.

Just revised numbers suggest that Athens 2009 deficit was at 13.6% of Gross Domestic Product, and might even be eventually tallied up at 14.1%. This is over four times the limit any EU country is allowed to have. And total debt is believed to be closer to $400 billion, as opposed to $300 billion figure quoted as “official”. Or about 115% of GDP. Other European countries are in not much better shape. Portugal, Ireland, Italy and Spain all have deficits in double digits and could be next in line for assistance, if unable to refinance obligations at market rates. Just like Greece. This would be disastrous for Euro.

Common currency actually rebounded on Friday. Probably because move by Greece ended speculation and became a fact, something easier to live with. It also came at important technical levels, especially in pairs like EUR-USD and EUR-GBP. Others as well. Prices found support at previous lows on daily chart, consistent with general charting analysis. These supports became even more important, which only means that if, no, when they are broken, the EUR fall might accelerate.

For EUR-GBP 0.8600 is proving to be pivotal support. Move under this line should be viewed as a longer term sell signal, with first objective relatively modest 0.8400. Should that break, 0.7700 is very reasonable. I will most probably not use daily charts for trading here. My accounts have enough longer term trades in them, so unless those are unloaded, I’d rather stay with intermediate term charts for Euro-Pound. Here is a look at 4H graph of this cross.

On this time frame, price rebounded strongly on Friday, reaching  0.38 FIB retracement level. This is a possible sell, if reversal pattern emerges, which might be a little complicated right away, because of the often unclear opening action. Selling here might best be done switching to 1H chart, in order to better define entry and stops. Objective would be 0.8515-20, just above main support. Should price advance to 0.8770 or so, strong bearish reversal candle on 4H chart would give a sell signal, with the same objective as before.

On Friday, many crosses experienced strong closing, meaning prices went into the weekend at, or near daily highs. When this happens, initial continuation after the weekend is likely, followed by a reversal few hours into new trading day. That’s what I’m looking for today. Some of the more promising candidates are NZD-JPY, AUD-JPY and EUR-JPY. Read on how this set up works. Also, gaps can happen, as they have been for weeks now, hopefully bringing additional additional trading opportunities. One thing that could spoil eventful opening is the holiday in Australia and New Zealand, as explained in video Economic Calendar. But that is out of our control.

Mike K.