#USDX Analysis for October 18, 2013 Trend News

Once our support trend line at 80.15 was broken, we noted that the downward move was looking impulsive and a new low was expected. The trend remains down with support at 79.60 and resistance at 80.35. Prices are expected to bounce towards the 50% or 61,8% retracement. A signal that could confirm this upward bounce is under way will be if prices break above the recent high at 79.77.

The chart above shows the levels that the upward bounce could reach. The decline is impulsive and for trend to remain down prices should move above the 61,8% retracement. More dollar weakness is expected after the upward bounce completes.

The daily chart continues to show that longer-term trend is downward and despite the small try for an upward bounce, prices collapsed and lost the entire rise in just one day. This confirms the strong downtrend that the Dollar Index is in. We remain bearish in the longer term. In the short term we expect a small upward bounce, and then downward pressures to resume to new lows.

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Gold Elliott wave analysis for October 18, 2013 Trend News

Gold has finished 5 waves up from the lows at 1,251, and we expect a pull back to reach 1,300-1,290. This will probably be a buy opportunity, before the next leg up we anticipate towards 1,350.

The short-term downward sloping trendline was broken and we should expect a back test. Prices have support at 1,300 and 1,290. Resistance is found at 1,333-1,350. We believe that since we see 5 waves up, we should expect more upside once the pull back correction is over. Stop for bulls should be the low at 1,251 or at least the 61,8% Fibonacci retracement of the rise. This stop is at the 1,280 price level.

The daily chart is promising for bulls as prices have broken above the downward sloping trendline that touches the tops from 1,434. However, we have seen similar big rises before as noted in the chart above that were followed by a low volatility day and sharp declines afterwards. That is why, we believe that long positions should only be opened when near the stop levels of 1,280 or 1,251.

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