November 2024 proved to be a month of volatility across financial markets, driven by significant macroeconomic and geopolitical events. From the closely contested US presidential election to key economic data releases, traders navigated a dynamic landscape shaped by rapid shifts in sentiment. While our trading signals faced challenges, with an overall negative return of -15.68%, the month offered critical insights into asset class performance and emerging trends. By examining the key events, asset performance, and standout trade opportunities, we aim to provide a comprehensive analysis of November’s trading environment while focusing on strategies for long-term growth.

Asset Class Summary

Forex
November 2024 was marked by significant volatility in the foreign exchange markets, largely driven by the outcome of the closely contested US presidential election on November 5, which led to a strong rally in the US dollar due to expectations of inflationary fiscal policies from the newly elected administration. The Federal Reserve's decision to cut interest rates by 25 basis points on November 7, along with similar moves from the Bank of England, added complexity as markets navigated the implications for future monetary policy. Geopolitical tensions, particularly concerning energy supplies from Russia and Australia, further influenced market dynamics, resulting in a surge in gas prices. Consequently, the US dollar strengthened against major currencies, while the EUR/USD and GBP/USD pairs faced downward pressure amid ongoing economic uncertainty. This created a challenging environment characterized by rapid shifts in sentiment and macroeconomic developments.

Indices
In November 2024, global stock markets exhibited a stark divergence in performance between the US and the rest of the world, primarily influenced by the outcome of the US presidential election. Following Donald Trump's victory, US equities surged, with the S&P 500 rising by 5.7% and small-cap stocks gaining an impressive 11%, driven by expectations of tax cuts and deregulation. In contrast, global equities outside the US saw a more muted performance, with the MSCI World Index up only 3.8%. Emerging markets underperformed significantly, lagging behind developed markets by 9 percentage points due to concerns over potential trade conflicts and insufficient domestic support measures in China. European indices faced headwinds from rising bond yields and geopolitical uncertainties, while Asian markets struggled with weak economic data and fears of a strengthening US dollar impacting trade dynamics. This contrasting performance highlighted the growing fault lines in global equity markets as investors reacted to divergent economic policies and conditions across regions.

Commodities
In November 2024, the energy markets for natural gas and oil showed significant trends influenced by supply dynamics and geopolitical factors. Natural gas prices surged sharply, gaining approximately 16% as colder weather increased heating demand and reduced renewable energy output, leading to tighter supply conditions in Europe. In contrast, the oil market experienced a more complex scenario; prices initially rose due to escalating geopolitical tensions in the Middle East but later stabilized around $70 per barrel as concerns over global demand emerged, particularly with declining consumption forecasts from major markets like China. OPEC+ announced a delay in easing production cuts, which helped stabilize prices amid ongoing worries about oversupply and weak demand signals. Overall, the contrasting performance in natural gas and oil markets highlighted the intricate interplay of seasonal demand fluctuations and broader economic uncertainties.

Cryptocurrencies

the cryptocurrency market experienced a remarkable surge following Donald Trump's election victory, with Bitcoin reaching record highs amid expectations of a more favourable regulatory environment. Bitcoin's price soared to over $89,000, reflecting a nearly 30% increase in just a week as investors anticipated Trump's pro-crypto policies, which included promises to soften regulations and establish the U.S. as the "crypto capital of the planet." This shift in sentiment was further fuelled by Trump's previous scepticism transforming into support for digital currencies, as he engaged with the crypto community and launched a new venture focused on cryptocurrency. Other cryptocurrencies also benefited from this bullish trend, with Dogecoin rising by 152% since the election. The overall excitement surrounding Trump's victory and its implications for the crypto landscape led to significant investment activity, positioning cryptocurrencies for potential growth under a pro-crypto administration.

November was a challenging month for our trading signals, with a negative return of 15.68% and a maximum drawdown of 21.65%. This follows October's weak performance and underscores the volatility in recent market conditions. Despite this setback, our focus remains on optimising performance and mitigating drawdowns to ensure long-term growth and stability.

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

FX Crosses achieved the strongest performance this quarter, with returns of 6.92% and a win rate of 47.42%, despite facing a significant drawdown of -9.57%. FX Majors followed with a return of 2.74% and a balanced win rate of 50.00%, coupled with a manageable drawdown of -3.34%. Cryptocurrencies also delivered positive returns at 3.16% and maintained the second-highest win rate at 52.00%, with a relatively low drawdown of -5.43%.

On the other hand, Commodities saw a negative return of -9.30%, accompanied by a win rate of 41.86% and a substantial drawdown of -9.30%. Indices faced the most challenges, posting the largest drawdown of -15.89%, with a return of -12.91% and a win rate of 44.30%.

Overall, FX Crosses emerged as the standout asset class for returns, while Indices experienced the greatest difficulties in managing drawdowns.

The chart below illustrates the differences between currencies and indices over the month. We observed consistent trends in some currency markets, which facilitated technical analysis and contributed to the positive performance in this asset class. In contrast, indices proved particularly challenging in November. There remains a noticeable divergence between the performance of US indices (Black line) and those from the rest of the world (Red line). These mixed conditions in both areas contributed to the overall poor performance.

Best/Worst Performing Markets

USDMXN delivered the highest return at 8.12%, with a win rate of 53.85%, though it faced a drawdown of -2.01%. GBPNZD posted a return of 4.25% and an evenly balanced win rate of 50.00%, with the same drawdown of -2.01%. GBPUSD achieved the highest win rate at 85.71%, coupled with a return of 3.27% and a relatively modest drawdown of -1.01%, indicating a stable and effective performance.

Overall, USDMXN led in terms of returns, while GBPUSD demonstrated exceptional consistency with the highest win rate and lower risk exposure.

In our recent analysis, three assets underperformed: CHINA A50, DAX, and NZDUSD. CHINA A50 had the lowest return at -4.70%, with a win rate of 30.00% and an equivalent drawdown of -4.70%, reflecting significant challenges in capturing profitable trades. The DAX showed a similar drawdown of -4.63%, coupled with a low win rate of 22.22% and a return of -4.60%, indicating difficulty in achieving upward momentum. NZDUSD fared the worst in terms of win rate at 14.29%, posting a return of -3.96% and a drawdown of -4.48%, underlining its struggles in the current market conditions.

Overall, these assets displayed low win rates, negative returns, and notable drawdowns, highlighting higher risks and challenging trading environments.

In November, USDMXN, though not the most popular market, delivered the highest returns. GBPNZD moved within a bearish channel throughout the month, and developing both buy and sell strategies during this time proved successful, yielding positive returns. Conversely, we identified China A50 as our poorest performing market, as its erratic trading conditions made analysis and consistent performance challenging.

Major Macroeconomic Data

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

Non Farm Payrolls - 1st November 2024

November's Non-Farm Payrolls report came in below expectations, with an actual reading of 12K against the forecast of 100K. This weaker number prompted a strong move higher in the US Dollar. On the day of the release, we executed a significant number of trades, achieving a positive overall outcome of 7.03%. Key trades that hit their targets included USDCHF & USDMXN.

US Presidential Election (Post Result) - 6th November 2024

The US election was anticipated to be closely contested, but in reality, it resulted in a significant victory for Donald Trump and the Republican Party. This led to a strong surge in the US Dollar and US indices. Many of these movements occurred overnight, which limited our ability to capitalise on gains during subsequent sessions.

US CPI (MoM) - 13th November 2024

The US CPI data came in slightly above expectations, initially leading to a dip in the US Dollar and sparking concerns about a potential delay in rate cuts. However, this trend reversed quickly in the hours after the release. The rally continued until around November 22nd, before declining towards the end of the month. The win rate was near our average, but the successful trades did not show significant follow-through.

Trade of the Month

Our team of expert analysts conducts daily market evaluations to identify high-quality trading opportunities. Each analyst brings a unique perspective, leveraging their extensive experience to produce accurate market forecasts.

For November, our trade of the month was GBP/NZD. Noticing the currency pair's bearish trend, our analyst spotted a triangle pattern, indicating a likely continuation of the downward trend. Predicting a failure at the previous swing high, they employed classical technical analysis to establish precise entry and exit points. This strategic method was in line with the expectation that prices would continue to form a pattern of lower highs and lower lows, resulting in a successful trade.

GBPNZD - 21st November 2024

• Direction: Sell
• Entry Level: 2.1560
• Stop: 2.1590
• Target 1: 2.1440
• Target 2: 2.1400
• Risk/Reward: 1 : 4

The setup

• The medium term bias remains bearish.
• The sequence for trading is lower lows and highs.
• Rallies should be capped by yesterday's high.
• Preferred trade is to sell into rallies.
• Bespoke resistance is located at 2.1560.

Here's a graphical depiction illustrating the trade setup and the analytical process behind the GBPNZD.

The Outcome

GBPNZD hit our targeted entry level at 02:35 (UK) with a drawdown of 28 pips, just 2 pips shy of the stop loss. The price quickly dropped from the high of 2.1588, aligning with the resistance noted at 2.1575.

Selling continued throughout the Asian session trading session, gaining further momentum as we approached the European open. The price reacted inline with the analysis, which highlighted the medium term bearishness and the potential for lower prices. The sharp sell off propelled the currency pair to our first target of 2.1440 at 02:35 (UK). Prices continued to fall, although the price came up just shy of our 2nd target at 2.1400.

Early on the morning of Friday, November 22nd, the price reached a low of 2.1409, narrowly missing our second target of 2.1400. The second target was not achieved.

Published: 15:05 UK (21st November 2024)

Triggered at: 02:35 UK (22nd November 2024)

Exit at: 09:30 UK (22nd November 2024)

Duration: 6 Hours and 55 minutes

Outcome: 4R

November’s trading results reflected the complexities of global markets, with a negative return of 15.68% and a maximum drawdown of 21.65%. Factors such as geopolitical tensions, central bank decisions, and unexpected election outcomes contributed to market volatility. While indices and commodities faced significant challenges, forex crosses and cryptocurrencies offered more stable returns, underscoring the importance of diversification and precise market analysis.

Key highlights included a remarkable performance in the USDMXN and GBPUSD pairs, demonstrating the value of technical analysis during volatile periods. However, areas like the CHINA A50 and NZDUSD highlighted the risks associated with erratic market conditions. By reviewing these outcomes, we remain committed to optimizing our strategies and mitigating risks to deliver long-term growth and stability for our trading approach.

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