Sorry, but oil isn’t going to hit $50: Technical analyst

Crude oil has risen powerfully since hitting $26 in the middle of February. But even as oil reaches above $45, one market technician says that prices are unlikely to reach $50.

Todd Gordon of TradingAnalysis.com uses crude oil track ETF (USO) to determine where oil could be heading even in the short-term. Currently, two counter-trend indicators could hint at oil's decline, according to Gordon.

"The rally that we've seen into the 200-period moving average has been $20.40, [the] total traveled distance from the $26 low to current price," Gordon told CNBC's "Trading Nation." last week. "Notice the distance traveled in the prior counter-trend swing: $20.55. So we have some very interesting symmetry here. "


Gordon also points to the retracement indicated by the weekly chart to illustrate how much resistance the oil exchange traded fund (ETF) faces leading up to $50.

"This is your textbook retracement that everybody looks for, this is the 61 percent retracement of the July decline down to the $26 low," the analyst said. "That 61 percent retracement is going to fall in at $47.70, so we have a mountain of resistance between $48 and $50 in crude oil," he added.


Given Gordon's bearish outlook for oil, the trader plans to short the ETF, exiting the position if his thesis is proven incorrect.

"I'm going to consider this trade wrong [and] contain risk when crude oil goes above 50 dollars," Gordon said. "While we're below $50, I'm going to maintain the short position in USO and look for a retest down into the $30's."

Some of Gordon's prior oil calls have proven impressively prescient. Back in November, Gordon called for oil to fall to $26.

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

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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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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