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


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more