The Macro Outlook

2020 was a unique year in many ways, with the Covid-19 outbreak and its associated effects being in focus throughout the year. There have been many reasons to celebrate in the last quarter, most notably the rollout of seemingly effective vaccines – but what does 2021 have in store for us?

The broad market consensus is that 2021 will be a relatively “easy” year, with normality returning in markets and our everyday life. All equity analysts in major banks forecast positive returns for indices and have little reason to worry. I think that there are important risks with this outlook, and in fact 2021 should be a difficult year for the global economy and markets in general:

  • The effects of prolonged lockdowns in many countries will continue to be felt.
  • Small businesses are struggling, and unemployment has reached very high levels. A considerable part of this unemployment will unfortunately turn out to be permanent.
  • The commodity index is on the verge of a multi-year breakout and that will inevitably bring inflation. Inflation will put downward pressure on bonds and that should push risk assets lower as a result.
  • Joe Biden’s plans for reform are generally seen as not being market friendly.
  • UK/EU negotiations continue and there is still a chance of a messy no-deal Brexit, which will put further pressure on the Eurozone and the UK.
  • We still have to see – in practice – the overall effectiveness of the Covid vaccines.

All of the above reasons make us very cautious with the coming year, and hence I think that the risk is for a general market correction lower. It’s been long overdue, and it’s become the path of least resistance. If equity indices correct lower, the Dollar should spike, and precious metals / oil / commodity currencies should move sharply lower. Such a move, however, is likely to be short-term, so fading it is probably the right trade. With most major central banks pumping liquidity at an unprecedented pace, it’s unavoidable that asset price inflation will eventually resume in the years to come.

Either way, we should prepare for a turbulent 2021 because the Covid effects will likely persist.

Stelios Kontogoulas

Blake’s Insight

2020 has been a hell of a year for most of us. If you have been long stocks and risk after the COVID-19 lockdown, you may have thought it was the best year ever. However, many families have lost jobs and/or loved ones and are witnessing the worst year of their lives. For everyone, I am sure the lockdowns (no matter where in the world you live) have been stressful to deal with, especially for families with children or older relatives. For this reason alone, I think most of us are looking forward to 2021 and what it will bring.

For the Forex Analytix team, we thought we would put together some top ideas into next year from a macro and technical perspective and maybe a couple themes we should keep in mind into next year, so please enjoy!

Weak USD into 2021


Looking ahead into 2021 the USD is already on a weak foot. With commodity currencies like the AUD, NZD and CAD making V shaped recoveries this year, it only makes sense that going into next year we should continue to see that play out as the global recovery continues to take place and demand for commodities continue to soar into next year. Technically, as long as the AUDUSD holds the .700 level we should eventually reach .8000 and possibly beyond. In the 1st quarter of 2021, we could see dips back to the.7200 or even .7000 level before eventually reaching .8000.

AUDUSD Market Outlook


The EURUSD held the broken trend line and dips to 1.1600 through the fall of 2020. And now while above the 1.2000 level we should be targeting the 1.2850, and possibly up towards the 50% retracement at 1.3186, into 2021. As long as the pair holds above the 1.2000 level the path of least resistance is higher.

The S&P:

The SPX broke above the megaphone resistance which should open the door for a move above the 4000 level towards the 4145 or 161% extension eventually. As long as central banks continue to keep rates low and liquidity ample, there is no reason to think otherwise at this point.

There are many things that could happen from the end of 2020 till the end of 2021. In December of 2019 did you see a pandemic plaguing the world economies? No you didn’t. So there are black swan events that could happen and could alter plans on a moments notice. But as we see it heading into 2021, central banks will continue with their “easy money” policies, inflation may turn higher as demand for commodities globally ramp up and the world economies continue to recover in a post COVID—19 world.

Blake Morrow

Grega’s Insight

DXY-SP500 Ratio: 5 Wave Cycle Suggest A Slow-down Of Current Trends

Stock markets have recovered very sharply and fast since March when we saw a strong drop following the first wave of coronavirus lockdowns. The monetary policy has quickly changed and caused a rebound on financial assets after QE, stimulus packages, and lower rates.  Stock indices are higher, some even above March levels even though COVID is not anywhere near the end; in fact, we see more and more lockdowns and restrictions happening globally each day as the holidays are approaching. This is clear evidence that QE is driving the markets and not real economic growth which is more evidence that the stock market is not the economy; stock prices are driven by supply and demand, and looks like more money printing obviously means more buying power.

In any case I believe that the stock market is a good indicator for the overall market sentiment, and currently we see more and more investors trying to jump on the train despite prices printing new all-time highs. On the put/call index ratio we can clearly see that investors are buying a lot of calls as they believe that prices will be even higher in the future. Calls moving to extreme levels is a great contrarian indicator since as we know that market moves from pessimism to optimism and vice-versa. So if we respect the past reversals in trends on the S&P500 based on the PUT/CALL ratio extremes, then we shall also be aware of a possible reversal now. Bottom line, I think there can be a risk-off move, in early 2021. It might as well be a temporary turn or pullback before we go even higher, but I think that it will happen and produce a much better opportunity to buy when PUT/CALL will be at the other side of the extreme.

We know that when there is risk-off move in the markets, cash is king, so the USD will rise. I realize that under current circumstances not all agree with this assessment since money printing should drive down the value of the money, however, I believe that there will be a dollar rebound even if the $ is going to crash later, and this pullback may not be far away if we consider that DXY/SP500 ratio is seen in a fifth wave drop from the March high. Based on Elliott Wave theory, the market is in final leg of the current bearish development so the next reaction is a counter-trend, normally developed in minimum three legs. This outlook also fits perfectly with the PUT/CALL ratio view as mentioned above.

DXY vs SPX500 Market Outlook

If stocks do indeed come lower, the question is where should you be invested? Most metals, bonds and some commodities are really interesting, but personally, my choice is silver as in uncertain times silver can be the most attractive. From a technical perspective it’s important to note that we haven’t seen any real and strong drop on silver while US indexes are printing ATHs. Price has mostly been only sideways since we found a high so, if stocks makes a pullback I think that silver can easily find buyers, either here at $23.00, or around $19.00, near the 61.8% retracement.

All the best.

Grega Horvat

Steve’s Insight: If Central Banks can’t print it, buy it!

As everybody has already mentioned 2020 was in many ways unique but in terms of economic (fiscal and monetary) policy it will be remembered as the year that accelerated the current move towards unmitigated economic disaster. I strongly expect 2021 to exacerbate the current trends that include a weak dollar, strong precious metals, strong commodities and general debasement of FIAT currencies. Just a little note, everything is overdone at the moment so don’t jump on these markets buying at any price, expect a pullback at the start of the year and consider that a buying opportunity. As my title mentions, whatever is not printed by the central bank pressers should appreciate in $ (and other currency) terms so whatever has intrinsic value should be bought. Below I selectively focus on a few charts which underline my point but you can find many more that share the same fate.

Gold about to break higher after correcting its prior gains

Gold continued and accelerated this year its appreciation that started back in 2015 by printing new all time highs. After about 4 months of a corrective move lower which took the form of a bull flag it looks like its ready to start the next move higher which should take it much higher. A break above $1920 will confirm and point to the 127% extension of the correction from the 2011 high to the 2015 low which comes at $2159.

XAUUSD 2021 Outlook
Silver historically lagging gold but 2021 might change that!

This year was a roller coaster for silver. It went from producing 11 year lows in March to printing 6.5 year highs in August after building a long term bottoming pattern. This is not the first time we have seen this movie, the market first cleaned all weak hands and frustrated investors before rallying without taking a breather. Since producing the high in August the market has consolidated in what looks like a symmetrical triangle but the recent break higher from the aforementioned formation points to another leg higher which in my opinion should eventually lead silver to new all time highs. Yes, that means to prices above the $50 historical double top!

XAGUSD 2021 Market Outlook
Copper exploding higher and it is taking no prisoners!

In a similar fashion to silver, Copper first imploded during the COVID risk off move before finally exploding higher following the post COVID policies. Specifically, we went from below $2 to above $3.60 within a period of 7 months! Expect the previous highs at $3.30 to be support from this point on and after a corrective move lower which has to happen at some point soon, we expect Copper to keep on going to find the fate of most things that have intrinsic value: printing new ATHs in FIAT currency terms.

Steve Voulgaridis

Andre’s 2021 Trading Opportunities


Weekly chart:
“The cup” was formed between the highs of September 2018 printed at $84.68, and the lows of February 2019 printed at $39.85.
The handle has found support (at least for now) at the very fist Fibonacci retracement level at the 23% Fib and we have targets above one broken resistance ($87.73) projected around $128.34.
Activision Blizzard 2021 Market Outlook


Monthly bullish divergence,  one inverted head and shoulders pointing at .7705, and the eventual bearish cypher pattern projected at 0.8105, reinforcing one major trend line resistance.

The Strong Bullish Divergence
Monthly chart:
Well supported by the bullish divergence shown between August 2015 lows and the most recent one’s printed in March, we should not ignore the potential for more upside momentum for the Kiwi.
The divergence noted, may suggest that “the kiwi” completed the formation of an ABC correction in March this year, but we still need the violation above July 2017 highs to get a clear confirmation.
We have one descending trend line approaching from above as potential element of pressure/resistance, and one bearish cypher pattern projected at 0.8105 – converging with the major 38% fib retracement between the highs of 1973 and the lows from November 2000.
2021 Market Outlook
The inverted head and shoulders
Weekly chart:
Triggered above 0.6790 (the neck), the inverted head and shoulders should target the 200% fib extension by default, projected at 0.7705. That “will” put the price trading above July 2017 highs, and will confirm the ABC correction completed in March.
Andre Cardoso