With 2020 finally over, many have already started looking towards the next 12 months in search of new storylines and trading opportunities.

Although storylines such as Brexit, and the U.S. Election will be left behind in 2020, the main storyline which captivated markets last year was the global pandemic (COVID-19) and the economic impact this health crisis had on the world. As it stands, even as several vaccines have now been authorized and made available for distribution, cases of the coronavirus have now surpassed the original peak, forcing many nations to consider re-imposing tough lockdown measures.

Taking this into account, and not yet factoring in any unforeseen major fundamental shifts, here are the top 5 markets to watch in 2021.

Gold

For the first 8 months of 2020, XAUUSD was without doubt one of the most traded markets on anyone’s dashboard. With markets falling as the outbreak of COVID-19 worsened, traders ran for shelter, finding this mainly in gold.

As such, XAUUSD climbed to above $2,000, setting multiple record highs and in turn breaking its highest point since 2011. Since then, markets have mainly consolidated between $1,860 and $1,965. With a vaccine now ready for distribution, could we see safe havens begin to fall back down to pre-pandemic levels?

Bitcoin

In March of 2020, BTCUSD fell by 50% in just over 24 hours, and reached a low at the time of close to $3,500. Last week prices of the Cryptocurrency rallied to over $34,000 as Bitcoin continued to make believers of previous doubters.

Many who previously wrote off the digital currency, have now doubled down on their investments, seeing value in cashless and digitized transactions in the midst of the health crisis. However, unlike 2017/18 when we saw a similar rally in Crypto, traders now have the benefit of hindsight in the ways this market moves.

A huge sell-off took place at the beginning of 2018, and the brief 17% drop in Bitcoin prices to start 2021 may act as a reminder, that what goes up, will at some point come down, however given the quick rebound after the initial drop in 2021 it is likely that we may see further highs first, before we see a sustained bear run in BTCUSD.

GBPUSD

Outside of the coronavirus pandemic, 2020 was one of the most volatile years in recent memory for traders of GBPUSD. This was due to the fact that both the UK and United States were embroiled in political uncertainty, unlike anything ever before seen in History.

In the UK, Brexit was the talking point, with Sterling traders fully fixed on if there would be a trade deal with the EU, before the December 31st deadline. Even though a deal was eventually reached, it went down to the wire, causing great shifts in pound strength.

Across the pond, the U.S. elections took precedence in USD trading, as Joe Biden and Donald Trump contested one of the most controversial elections in history, leading to the highest voter turnout in recent memory.

Cable fell to as low as $1.13, and reached as high as $1.37 last year, however many now are looking for some form of consolidation from the pair, with a range of $1.26 – $1.34 being what many traders are targeting for 2021.

Crude Oil

As the world shut down in the first half of 2020, demand for crude oil was non-existent, leading to prices of the energy going below ZERO for the first time in history.

However, this was short lived, and as demand slowly picked up, so did prices, leading to WTI trading in a range of $36 – $49 for the second half of the year.

Now that vaccines have been put into circulation, many believe that we may soon see some form of normality, which could bode well for energy prices, with some targeting the $64 pre-pandemic resistance as the next key price point.

S&P 500

The S&P 500, like many markets moved by historical amounts between March-April last year, however quick and decisive action from the Fed, as well as strong performances from U.S. tech stocks, helped the benchmark index not only recover, but set several new highs in the process.

The main question for 2021, is how long will this continue? Indices are currently on their longest bull run in history, and like every good trader knows, what goes up, will come down, but when?

Bulls do still remain in this market, however could there be further setbacks on an economic recovery, will we see an even bigger drop than what we saw last year?

Eliman Dambel

Senior Market Analyst
edambell@tvmarkets.com