Technicals To Watch For The Upcoming Week

While all eyes will indeed be glued to next week's Federal Reserve's statement and press conference on Wednesday, those viewing through a technical lense will be watching how stocks fare at the recent year-to-date highs. After finishing last week not only at the days highs, but at the week's high, NQ (Nasdaq 100 futures) and ES (e-mini's) also closed at the high of 2023. This bullish momentum is occurring while sentiment grows even more pessimistic amongst (CFTC) speculators as extreme bearishness got even worse last week. That said, if this powerful 2-day move up in NQ and ES futures lacks the follow-through as early as Sunday's Asian open and fails to convince the growing number of bears that the major US equity indices are breaking out, which could reverse the latest trend of falling volatility as seen in the VIX.

Both NQ/ES futures at the highs (NQ 13350/ES 4200) will be key drivers in the upcoming week, the British pound and Japanese yen will also both be keenly watched in determining whether Friday was merely month-end flows that could mark exhaustions on GBP/USD and USD/JPY daily charts. Again, sentiment to open the week and the month of May could be vital to key measures of risk appetite, but more importantly it could offer critical daily chart breakouts for ES and NQ futures, which have ample room to the upside given how negatively positioned large speculators are this moment. Moreover, both ES and NQ futures have more than 3% to the next nearest resistance.