FX.co ★ Gold Elliott wave analysis for October 18, 2013

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.