In this blog post, we will delve into the trading signals generated by Acuity Trading in the month of May 2024. Our analysis not only dissects the major market influences that shaped the trading landscape but also offers a comprehensive breakdown of the top-performing asset classes and individual markets. From the fluctuations in FX markets to the soaring indices and the rally in commodities and cryptocurrencies, May was a month marked by dynamic movements and strategic opportunities.

Asset Class Summary

FX Markets

• Initially, the dollar showed strength in response to the job data, but later weakened as concerns about inflation resurfaced. Meanwhile, the British Pound experienced depreciation against the USD but saw gains against the Euro and Yen, reflecting a mixed bag of economic signals.

Indices

• The S&P 500 and Nasdaq soared to new heights in the middle of the month, fuelled by positive inflation data and optimism surrounding potential interest rate adjustments. However, concerns about a slowdown in job growth towards the end of the month cast a shadow over market sentiment. In contrast, Europe saw moderate gains, with the Europe Stoxx 600 climbing on strong earnings reports. On the flip side, the FTSE 100 struggled as hopes for rate cuts dwindled amidst looming election uncertainties.

Commodities

• Gold and Silver rallied, likely seen as a safe haven by investors during market volatility.

Cryptocurrencies

• Bitcoin saw a significant recovery, driven by renewed institutional interest and favourable regulatory developments. Cryptocurrencies faced regulatory pressures, particularly in Europe, where new policies aimed at increasing market transparency were introduced.

May was a profitable month for our trade ideas with 330 trades triggering and a win rate of 50.61%. This led to returns of 15.87% for the month, with a maximum drawdown of 9.53%.* 

The simulated performance statistics provided are based on the assumption of risking 1% of trading capital per trade. It is crucial to understand that past performance, whether actual or simulated, is not indicative of future results. 

12 month simulated performance statistics

Asset Class Performance

The top performers for the month were FX Crosses, showing a strong rise of 11.32% with a minimal drawdown of -3.88%. Following closely behind were Cryptocurrencies, showcasing a solid increase of 4.12% with a drawdown of -3.94%, while commodities also saw gains of 2.66% with a drawdown of -6.44%.

May proved challenging for indices, as volatility subsided and the asset class struggled, culminating in a -3.66% decline for the month. A notable divergence emerged between US and European markets. The S&P 500 managed a modest gain of 0.28% from May 14th, while Germany's DAX 40 suffered a -1.54% loss over the same period. The graphic below illustrates these tough conditions, underscoring the complexities faced by investors.

Best/Worst Performing Markets

In May 2024, GBPAUD emerged as our standout performer, driven largely by gains from short positions. Mid-month, GBPAUD completed a bottom formation, enabling us to profit counter to the prevailing trend. Despite the pair's overall lack of clear direction, its adherence to key technical levels facilitated robust returns.

Our challenges in the indices sector are evident once more in the outcomes, specifically with CAC and ASX200. The trading environment in both indices remained uncertain throughout May, lacking a definitive trend to follow.

The overall trend on the daily chart going into May for GBPAUD was negative, which continued to play out. The overall trend for ASX200 was positive, but our bullish approach did not help results.

Major Macroeconomic Data

Here is a snapshot of how our trade ideas performed on the day of key macroeconomic data.

U.S. Employment Report - 3rd May April 2024

The jobs number came in lower than the 243K forecast at 175K. This triggered an initial strong move lower in the US Dollar before returning to the pre-release level within 11 hours.

BOE Interest Rate Decision - 9th May 2024

The BOE interest rate decision came inline with expectations. There was an initial move lower in the British Pound before a strong reversal of 2.84% over the next 19 days.

US CPI - 15th May 2024

The US CPI reading came in lower than expected, triggering volatility in the US Dollar. The Dollar fell 0.72% in the 8 hours after the data release before correcting higher.

Trade of the Month

Every day, our team of analysts diligently identifies the best trading setups across various markets. Each analyst employs a unique approach, leveraging their expert knowledge and experience to generate high-quality market calls. Our standout trade for May was a buy position on USDCAD executed on the 23rd.

Despite aligning trades with the dominant trend, our analyst had faced challenges with USDCAD. While evaluating a trade setup for the day, they noticed the upcoming PMI data from the US. Anticipating a stronger-than-forecast reading, which typically boosts the dollar, the analyst seized the opportunity. This strategic insight led to a highly successful trade, demonstrating the importance of comprehensive market analysis and timely decision-making.

USDCAD

Direction: Buy

Entry Level: 1.3660

Stop: 1.3635

Target 1: 1.3735

Target 2: 1.3750

Risk/Reward: 1:3

The setup

• Price action looks to be forming a bottom
• The trend of higher lows is located at 1.3590
• Short term RSI is moving higher
• Further upside is expected
• A move through 1.3700 will confirm the bullish momentum

The Outcome

USDCAD moved lower during the morning European session towards our entry level at 1.3660. The trade triggered at 14:13 (UK), which was 22 minutes before the US services and manufacturing PMI data. The data came in better than expected, which triggered a move higher in USDCAD.
After triggering at 14:13 (UK) we saw minimal drawdown on the trade setup of 3.6pips at 14:35 (UK). The price continued to move higher for 6 consecutive hours, reaching the first price target of 1.3735 at 19:06 (UK).

The price eventually topped out at 1.3743, falling short of our 2nd target at 1.3750.

Triggered at: 14:13 UK

Exit at: 19:06 UK

Duration: 4 Hours and 53 minutes

Outcome: 3R

As we wrap up May 2024, it's evident that the trading signals provided by Acuity Trading have navigated through a dynamic and challenging market landscape.

Despite the fluctuations in currency values, particularly the USD's decline, and the mixed performances across global indices, our signals have consistently offered valuable insights. The robust rallies in US stocks, coupled with the strategic movements in commodities like oil and gold, have underscored the importance of timely and informed decision-making. Our dynamic email tools have further empowered brokers and traders, ensuring personalized and data-driven strategies. As we look ahead, we remain committed to delivering cutting-edge analytics and signals that help you stay ahead in the ever-evolving financial markets.

Thank you for your continued trust in Acuity Trading. Stay tuned for more updates and insights in the coming months.