Trader who called for $26 oil now predicts this

It sounded crazy at the time.

In mid-November, when crude was trading at $41 per barrel, technical analyst Todd Gordon predicted that the continuation of oil's decline would take the commodity all the way down to $26.

And that is precisely what happened. On Thursday, Feb. 11, oil traded as low as $26.05 — a level it has since bounced off of powerfully.

Read MoreOil market downside looms amid 'humongous' pressures: BofA's Blanch

But before becoming convinced that $26 was indeed the bottom for crude, there is one more thing that Gordon needs to see.

"There's a cluster of resistance between $37 and $38," he said Thursday on CNBC's "Power Lunch." "If we can break through that, then I could say the low is secure, and I could pat myself on the back. But not before then."

First of all, since this zone was recent support (it is where crude oil bounced in August before breaking below in December), it is now a level of resistance, Gordon said.

Second, recent history shows that crude is capable of rallying as much as 50 percent in the midst of a larger downtrend, as it did in early 2015.

"What we need to see is a break above a 50 percent rally. Currently we're about halfway from the lows — so that points to about $38," he said.

This is a similar method to the one Gordon used to forecast $26.

His argument then was that history repeats — and just as oil fell 77 percent amid the financial crisis, it was doomed to drop 77 percent from its highs once again.

Read MoreThe chart that says crude oil is going to $26

Latest Special Reports

  • A logo sits on a sign at the World Economic Forum in Davos, Switzerland, on Thursday, Jan. 23, 2014.

    Coverage of the World Economic Forum’s annual meeting in Davos, Switzerland.

  • Take an in-depth look at the world of modern medicine - examining the treatments, companies and people making a difference in the way we treat illness and injuries today, and laying the foundation for the medical treatments of tomorrow.

  • Fintech

    From Apple Pay to roboadvisors, the worlds of finance and technology are changing the way we live, work, spend money, and do business.

About Trading Nation

  • Trading Nation will offer enthusiast traders insights from a group of "Trader Coaches," a collection of expert CNBC Contributors who are well-versed in the daily challenges of trading. Each "Trader Coach" will have a different area of expertise, and will share their unique perspective on the markets, allowing new insights to emerge from this collaboration. Trading Nation is not simply about finding that next trade; it's a forum where enthusiast traders can hear and compare investing ideas in order to build confidence in their trading decisions.

On-Air Video



"Power Lunch" Co-Anchor