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O’Hare: Gold’s corrective move

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The strengthening of the US economy has served as a major catalyst for shifts in the price of gold over the last month; however gold has maintained a almost two-week high despite the fact that strong US manufacturing data was released on Monday. Gold’s ability to maintain the gains sustained from last Friday’s rally has signaled to Steve O’Hare from First 4 Trading that it might be an ideal time to buy gold.

Crucial factors to watch on Tuesday include the announcement of a snap election from Japan’s Prime Minister Shinzo Abe and additional comments from the European Central Bank regarding stimulus projections. Japan slipped into a technical recession on Monday after the economy contracted 1.6 percent. 

Steve is looking to buy gold on a break of Friday’s and Monday’s high at USD 1,195. Initially he is targeting a move higher towards USD 1,225 which is the 78.6% Fibonacci retracement level. A second target has been placed at the flag projection level of USD 1,240 and his final target has been set at the 261.8% Fibonacci extension level of USD 1,255. A stop can be placed at USD 1,175.

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