Event risk. Liquidity risk. Market risk.

The three major risks will be high as Chair Yellen speaks at Jackson Hole. The headline risk will lead to high liquidity risk. Of course there is always the market risk as long as the market is trading. The market is trading, isn't it? Just joking.

The EURUSD range is only 32 pips so far today. The NY session has seen a move to new highs in the NY session at 1.3310. The 1.3307 level was the prior high. That was quickly reversed to 1.1283. That is what event/liquidity risk looks like it.

Now, assuming that Yellen has something concrete to say (or the headlines portray it that way), the levels that I would be focused on include the following.

Hawkish move (hints September)

Looking at the hourly chart, I would expect the dollar to get stronger/the EURUSD goes lower. The levels to eye.

  • 1.1270. This is the low from August 22 and the afternoon low from yesterday's trading. The market used it yesterday to lean against. That makes it more important today.
  • 1.1239-45. The low on August 17 was 1.1239. A swing low on August 16 came in at 1.1245. The 38.2% of the move up from the August low comes in at 1.12433.
  • 1.1218-21. The 100 day MA is at 1.1221 while the 100 bar MA on the 4-hour chart is at 1.12187.

A move below those three levels will next look to get below 1.1200-05 The 50% of the move up in August comes in at 1.1205. The 1.1200 is a nice round number.

With the price trading below 1.1300 now, if Chair Yellen were to talk about September tightening, a move below 1.1200 is not really that far away and it certainly is doable. Since the market is so skittish, it might give a short opportunity just because the market is used to not going far. These levels become clues. They also become risk defining levels on a trade.

Dovish (tightenings off the table)

If the chair is dovish. That is, hikes are off the table...Then the EURUSD should shoot higher. What levels to target?

  • 1.1311. The market price is not that far from this price but it is the topside trend line over the last two days.
  • 1.1354. That is the high from August 23.
  • 1.1365 -68. High and the underside of the trend line.

A move above those levels open up the topside for the pair.

If she is neutral, look for choppy action.