News are still full of Greece bailout story. Euro weakens- blame it on Greece fallout, Yen hits the skids- bailout in Europe us behind it. Anything else – “spillover effect”. Must good time to be a financial reporter, with ready made explanation for anything that happens. How can you go wrong? After all, everybody is using the same excuse for any new evil raising head. Never mind, that the bailout, while approved and committed to, is not a done deal. Still no parliamentary approval from Germany, the biggest contributor. I’m convinced they will agree, but the suspense goes on.

At the same time Portuguese Foreign Minister is trying to reassure other EU officials, that his country is doing all it can to avoid what happened in Greece. Portugal is one of the other countries which is believed susceptible to market sovereign debt failure. For some time now Portuguese obligations have seen interest rates rising, with markets not happy what they see. According to Portuguese FM, situation is not as critical as Athens, but constant pressure from the markets, might exacerbate the problem, making it very costly to refinance debt. In other words, speculators are to blame, if Lisbon asks for assistance. In order to prevent it “We need to deal politically with the situation” said Mr. Amado, probably meaning more regulation or something of that sort. Sounds like another mess brewing.

Meanwhile, opening was relatively soft, probably due to holiday in Australia and New Zealand, or maybe because players got tired of reacting to the same, repetitive news. Who knows? Bottom line is, currencies didn’t have any gaps to speak off, at least not large enough for me to try and trade them. Nonetheless, Euro fell a little bit, creating decent set up for a small trade in EUR-GBP. Yesterday I used 4H chart of this cross, where two possible sell areas were indicated. One was just about at opening price and for that hourly chart should have been used to better define trade parameters. Had some connectivity problems with my primary broker, so used one of other accounts for these trades.

This pair had small gap and then moved a little bit both ways, creating minor high and low. I shorted it under the low, at 0.8661, looking for a move towards Friday’s low. That worked pretty well, and I got out at 0.8613. Trade caught most of the move. Not bad. Japanese Yen crosses were also covered yesterday, with NZD-JPY used as example and AUD-JPY and EUR-JPY mentioned. I’ll go over EUR-JPY first.

For these trades I was looking for a uptrend continuation and then exhaustion few hours after the opening. Moves were small, but eventually fairly large bullish candle showed up. After that, it was time to wait for a bearish one. When it formed I shorted those three Yen pairs, targeting opening lows. EUR-JPY reached objective for 70 pips. Other trades didn’t work out that well.

Kiwi-Yen didn’t get nowhere near earlier lows. When EUR-JPY was closed, I gave this one a little longer, but once it started to turn, decided to close it for small gain. Sold again later in the day, with a little better results. Second trade was just closed for 59 pips. Right now I’d like to see this and other JPY pairs to establish short term bottom, reverse and then drop again, like the drawing indicates. Trades in AUD-JPY were almost identical.

As far as I’m concerned, there is a lot going on right now, with many possible trades all over the place. Here. I’m taking another look at EUR-GBP, a little longer time frame, 4H. Break under 0.8600 should start a move to maybe as low as 0.8400, but using this chart I’d be perfectly happy to see 0.8500. We’ll see what happens.

Mike K.