Extend and Defend

On the back of another short squeeze higher in crude oil, post inventory report this morning, stocks are attempting to build on their opening gains and bounce back from a poor close yesterday.

For context and for trading, we are keying off the IWM (ETF for the Russell 2000 Index small cap stock) 30-minute chart, seen below. The bear flag breakdown, highlighted in light blue, gave us an opening for a quick short scalp late-yesterday. 

And now the issue is whether more downside awaits into Draghi this week and the Fed next week. 

If $107 continues to act as a brick wall now, especially as crude squeezes, it should be a victory for bears. Back over $107, and I suspect bears will need to step out of the way again and let bulls do their thing.

Also note the trendlines of the bear flag extended out can often give good reference points for analysis, something often overlooked by traders.