• Fed Chair Jerome Powell makes his first major appearance as head of the Federal Reserve before the House Finance Committee.

• What Powell says during the Fed chair's semi-annual economic testimony could help decide whether stocks continue to rally, break out of a band of resistance and head toward new highs.

• Powell is not expected to rock the markets, but traders are watching to see how he handles Congress and whether he can walk the fine line of not sounding too hawkish or too dovish.

Whether stocks can keep rallying may depend on how well Fed Chair Jerome Powell handles Congress on Tuesday.

Powell makes his first major appearance as head of the Federal Reserve before the House Finance Committee on Tuesday at 10 a.m. ET. He will provide the Fed chair's semi-annual testimony on the economy again before the Senate on Thursday.

The markets have been anxious about what Powell will say on inflation. The worry is that if the Fed expects an acceleration in inflation, it could see that as a reason to raise interest rates more than the three times it currently has forecast. The Fed's next official forecast is released after its meeting March 21, where it is expected to raise rates for the first time this year.

"I think he's going to avoid getting boxed in, and there's no need or urgency to communicate," said George Goncalves, head of fixed-income strategy at Nomura. "He has not had his first official meeting on his watch, so how can he really deviate from the prior agenda without having run it by the committee?"

Powell is not an economist and has a reputation of speaking simply, clearly articulating Fed policy.

"He could be a great presenter. That could be enough to calm the market down. We'll understand where he's trying to take policy," he said.

The Fed provided a road map for Powell's comments in its Monetary Policy Report on Friday. "The meat of the message is going to be out there. The variables we don't know are what kind of questions he's going to get," said Goncalves.

The bond market was tame in the session before Powell's testimony. Yields, which move inversely to price, were lower across the curve, and the 10-year Treasury yield was at 2.86 percent, down from 2.95 percent just last week.

That helped feed a sharp rally in stocks Monday, with the Dow up 399 points to 25,709 and the S&P 500 up 32 at 2,779.

Scott Redler, partner with T3Live.com, said the next level to watch on the S&P 500 is a band between 2,790 and 2,810. "It's the next level of resistance that could cause a bit of a pause, but how we digest there will be important to see if it can work its way back to the 2018 highs," said Redler.