Mad Money

Cramer's two signs that oil's bottomed already

What's next for oil?

Now that the price of crude has rebounded back up to $52, Jim Cramer wants to know whether black gold has reached a rally that is sustainable, or will it make a staggering decline back down into the $40s?

"That is a huge question for this market, especially since the make-or-break point for so many oil companies is roughly $45 a barrel, just $8 below the current price of crude," said the "Mad Money" host.

To find the answer, Cramer turned to Carolyn Boroden, a technician who is a colleague of Cramer's at She also works as a commodity trading advisor and runs

Boroden last spoke with "Mad Money" when crude was at $67, back in December, and she totally nailed the pending decline, stating that it could easily fall below $50.

An oil well owned an operated by Apache Corporation in the Permian Basin is shown in Garden City, Texas, Feb. 5, 2015.
Getty Images

At the time, Boroden also provided two signals that would indicate a bottom in oil. First, if the WTI five-day exponential moving average crossed above its 13-day exponential moving average, that would be a bullish signal.

Secondly, if there was a pattern shift in the charts that have higher lows and higher-highs, that would make Boroden believe that oil is headed higher.

Oil hit a pivotal point on Jan. 29, when it reached $43. Thus, Cramer asked Boroden if this could indicate a bottom for crude?

There has been a bounce of more than $10 since that Jan. 29 low, indicating a big move on the charts. Additionally, Boroden also saw that oil's five-day moving average crossed above its 13-day moving average for the first time since October.

Bullish signal No. 1? Check that box off.

Boroden also found that after January hit a new low in oil, it broke out above its previous high of $51 from Jan. 15. This means that oil has made higher highs.

Bullish signal No. 2? Box checked

Not only that, but she also found evidence that Jan. 29 was the bottom for oil through the utilization of a Fibonacci analysis. This analysis took into consideration key ratios that tend to repeat themselves multiple times in nature and indicate key levels in the market.

Boroden conducted a Fibonacci analysis to compare price and time. And on Jan. 29, three of Fibonacci's cycles came due, which indicate a pivotal point for oil.

In the long-term, Boroden expects that if crude can break through resistance levels of $57 and $60, then it will be smooth sailing until it hits $70.

And if there is a pullback instead and oil turns bearish, she recommends using the weakness to do some buying.

Read more from Mad Money with Jim Cramer
Cramer Remix: Winners in the week ahead
Cramer: The best way to avoid student loan debt
Cramer game plan: Next week's hot stocks to watch

So while oil has been extremely volatile lately Boroden thinks that the dark days of oil could be behind us, in the form of an oil bottom on Jan. 29, and it could keep rallying higher.

"That's good news for the oil stocks, especially since just a couple of weeks ago we were worried that many of the marginal players might be in trouble," said Cramer.

Correction: This article has been updated to reflect the long-term key levels being watched for oil are $57 and $60.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine

Questions, comments, suggestions for the "Mad Money" website?