After a substantial rebound that's led oil prices to nearly double from their February lows, some traders predict that the crude comeback is coming to an end.
"I think we've bounced off resistance and it's time to get short," Todd Gordon of TradingAnalysis.com said Wednesday on CNBC's "Trading Nation."
Using the chart of oil-tracking ETF USO to make his point, Gordon determines the level of resistance is at $12, just above current prices.
Gordon notes that $12 would mark a "retracement" of roughly 50 percent of crude's decline from October to February. Many technical analysts use such figures in order to determine important levels on the charts.
The $12 level would also mark the pinnacle of a second uptrend line that Gordon draws on the chart.
"Countertrend swings usually have equal leg movement," he said. "The first one was a move of just below $8 up to $11, about $3." After a drop back to about $9, "we're seeing a similar $3 move," up to $12.
To trade the USO, Gordon encourages using options that expire in three Fridays, on June 17. Specifically, he is buying the 12-strike put and selling the 10-strike put to create a bearish put spread.
Because he is spending 58 cents on the trade in total, the maximum loss is that amount, while his maximum gain comes if the USO falls to or below $10, at which point Gordon makes $2 minus 58 cents, or $1.42. The trade breaks even if USO ends up at $11.42.
Still, if his thesis proves to be incorrect in the short term, he won't wait for a turnaround.
"If we get back above the $12 mark in USO I'm going to cut the trade, protect the premium, move to the side and look for the next trade," he said.
Gordon's prediction comes ahead of Thursday's OPEC meeting in Vienna, which could determine the oil market's next move.