Gold and silver take the highway to hell after a stairway to heaven

There's a lady who's sure all that glitters is gold and she's buying a stairway to Heaven
 -Led Zepplin

 Gold and silver dropped sharply on Friday with analyst siting that markets reacted to the news that President Donald Trump had selected Kevin Warsh to replace Jerome Powell as head of the Federal Reserve. However, that is only partially true.

"I have known Kevin for a long period of time and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best," Trump said in a post on the social media platform.

However, Gold fell below $5,000 earlier in the day ahead of Trump's announcement on Truth Social championship of the former Fed governor. Powell's term as chair expires May 15, but the U.S. Senate must vote to confirm his successor.

Gold’s April futures contract suffered its worst one-day decline on record as they settled at $4,907.5, down 9.30%. 

While there are technical studies that might have forewarned the drop, such as technical studies that reference the significance of nine higher consecutive highs. There is the Demark 9 made famous by western technical analyst Tom Demark and described in a candlestick pattern originating from the far east, “eight to ten new price highs”. Both methods would have looked for this extended run up to reverse after approximately 8 or 9 new price highs which we got yesterday in gold.

In both gold and silver traders were expecting and anticipating a steep pullback before we even crossed the $5,000 mark. The pace of gold’s ascent came from in part to retail investors pilling into gold and silver, unfortunately this also meant an increase in more price sensitive traders or traders with weak hands.

Today’s brutal selloff was begun by large traders taking profit, and accelerated when Trump announced his Fed Chair pick which added fuel to the fire accelerating the selloff in progress

Wishing you as always good trading,