AUDUSD Bounces from 0.7 But Elliott Waves Suggests Another Attempt at the Lows

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The AUDUSD pair bounced from the 0.7 level after completing a head and shoulders pattern’s measured move. The bounce is nothing unusual for the pair considering the importance of the round number and the fact that the market participants take profit ahead of the first presidential debate in the United States.

However, the Elliott Waves theory suggests that the AUDUSD pair still needs to make at least another leg lower below the 0.7 level. The five-wave structure is not completed yet, and bears may use the recent bounce to position on the short side.

Light Data from Australia This Week

This is the NFP week and therefore, the most important economic data for the week is released on Friday. But it does not mean that the market will not move before Friday’s release – the first presidential debate will likely bring in volatility, as well as the ADP data on Wednesday.

The economic calendar is light in Australian data this week. The building permits or the AIG manufacturing index are second or third-tier data in Australia. Hence, if the AUDUSD pair is to move this week, it will do so based on what investors perceive is happening in the United States with the USD and the U.S. election.

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AUDUSD Technical Analysis

The AUDUSD reached 0.74 at the end of the previous month. It corrected for the entire month of September and dropped all the way to the 0.7 level before bouncing.

However, the five-wave structure is incomplete. It looks like the recent bounce is just the fourth wave in a bearish impulsive move, and the fifth wave follows. If that is the case, the fifth wave must make a new low when compared with the previous third wave. Hence, a move below 0.70 is in cards. Bears may want to go short at market and target 0.6960 with a stop-loss order tat 0.7275.

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