Technical analysis and notes on the condition of the financial markets and the trends for 2021.

Every quarter we are reviewing and analyzing the charts of the instruments that we trade and follow, with the single purpose to determine the trend and to point the direction of the potential trades, the levels, where an opportunity may occur! We do that to be better prepared for the quarter ahead, and to be able to review our analyzes later on and to determine what we can improve and what type of errors we made. Learning from your mistakes is not only the key to a successful trading career but the key to a better life as well.

2020 was the year of COV19, the year of old trend getting revived (the USA stock market, crypto,) and the year of an old trend coming to an end, and the start of the new trend (end of the bullish USD trend and begging of new bearish USD trend).

Since the COV19 vaccine is now ready and becoming available in the western world, the expectations are that the economies around the world will have a very strong bounce in the spring of 2021 and continuing expanding during the summer of 2021. Traders, hedge funds, and institutional investors are already betting on that with bets on commodities, the traveling industry, and the so-called values sector. However, the rotation out of tech to value is not happening yet, and the tech sector is the one that continues hitting new record high almost daily in the last quarter of 2020.

As of today, the 17.12.2020, Australia and the New Zealand 10-year government bond yield are a bit higher than the USA 10-year government yield, and the Canada 10-year government yield is getting closer to the US 10-year yield. The FED continues to repeat that the interest rates will be low until 2023 – 2024, perhaps the Australian, New Zealand economies will not need low-interest rates for so long (especially if the inflation rise above 2.00%), meaning their Central Banks will start raising the base interest rates as soon as the end of 2021, beginning of 2022. That is why the AUD and the NZD currencies will once again become carry trades, and that is why traders and institutions are already long these currencies against the USD.

Gold, Silver, Copper, and the US stock market had a very strong year! The trend in Silver, Copper, and the US stock market is very likely to continuing in 2021 as well. However, the US stock market is pricing too rosy picture and it is ahead of its time. Therefore, we are expecting to see one of the following things materialize in 2021:

   - Once again high volatility.

   - Correction in the USA stock market in the begging of 2021, before the continuous bullish trend.

   - Or Continuation of the bullish trend with SPX reaching 4000 and NASDAQ 14 000 before we see a significant correction in the summer of 2021!

Either way, it will be an interesting year.

The weakness in the USD will continue in the first quarter of 2021, supported by the fact that the Biden administration will want additional stimulus, the FED will confirm the continuation of their bond purchasing and continuing to reaffirm their commitments to low-interest rates.

The question is, are we going to see a significant spike in inflation in the US and can that change the FED minds for low-interest rates until 2023!

Have an amazing and extremely profitable 2021 year, be calm, focused, precise, positive, and learn from your mistakes!