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These stocks are entering a 'sell zone': Technician

Chinese stocks are running into resistance: Trader

China's markets are bouncing back this week, with the Shanghai composite index rising more than 4 percent in two days. However, one trader is betting that Chinese stocks will soon see another big swing, this time to the downside.

Todd Gordon of said the China large-cap ETF (FXI) is about to run into resistance at the $40 level, which could put a stop to its recent rally.

"The market has retraced off the lows after the big emerging markets and Chinese rout that we saw to the downside. I think the market has rallied back into a nice, corrective sell zone," Gordon said Friday on CNBC's "Trading Nation."

Although FXI fell slightly after the opening bell Friday, the ETF is on track to end the week up almost 5 percent.

Read More The next stocks to get hit by the China earnings threat

Gordon sees FXI going back to $36, a 7 percent drop from where it traded Friday morning.

"When $40 trades, I'm going to go ahead and get short the market," Gordon said, by selling the November 40-strike call and buying the November 42-strike, creating a call spread for 52 cents each.

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