Summary:

• US500 moves to highest level in 3 weeks
• Price now back near the daily highs seen before rapid drop
• Market has now recaptured the 61.8% fib of the decline  

US stocks ended last week on a positive note and this morning there has been further gains seen in the indices across the Atlantic with the US500 higher by around 0.4% at the time of writing. The market has risen to a 3-week high and is now currently trading at similar levels to those seen at the start of the month before we got the major decline on Monday 5th Feb.

 The US500 has continued to recover from the large declines seen at the start of the month. Source: xStation

A daily close above the 61.8% fib of 2747 would be a clear positive development and should this occur then the 78.6.% at 2806 could be tested in the not too distance future. On the other hand, any reversal in this region could be key and a failure to end the day above 2747 could see another attempt made at the lows. The earlier weakness saw the 8 and 21 EMAs form a bearish cross on D1, but the recent gains have seen these two moving averages converge and they could be set to print a bullish cross (8 above 21).  

 The 8 and 21 EMAs have converged and the recent trend lower could be set to come to an end. Source: xStation

Whilst today’s trade may prove decisive for the next move in US stocks, there is a major event tomorrow which could cause a surprise. Fed chair Jerome Powell is set to give his first policy speech since assuming the role and whilst we earlier focused on the impact this could have on the gold price, it could prove equally important for stocks.