Here are the warning signs crude could drop to $41: Technician

Crude has seen a spectacular surge this year, but its recent struggles lead one technician to believe that the crude oil run is over.

Evercore ISI technical analyst Rich Ross sees crude oil falling to $41, a level it hasn't hit since April. This would be a 10 percent drop from Thursday's $45 level.

"With the Dow and the S&P at a new all-time high, crude oil has been one of the rare disappointments out there this month," said Ross Thursday on CNBC's "Trading Nation." "[Oil has fallen] over 5 percent even as emerging markets surge and the U.S. pushes to new highs."

Ross looks at a daily chart of the WTI crude to show that from the technical side, oil's short-term prospects don't look too solid.

The first sign of trouble, according to Ross, is that oil recently broke back below its 50-day moving average. Crude had broken above the line in March and maintained its levels, but the recent dip below could signal a reversal to a downtrend.

Ross also believes that oil's 200-day moving average is worth a look as well, especially given that he sees the line as shifting from a mark of resistance to oil's new support level. Ross' chart shows that since 2014, crude oil had failed to break through its 200-day moving average three times until doing so in April of this year. But now oil could be dipping toward what could be a new support level based on where the line is going, which looks to be around $41.

"That prior resistance on the 200-day becomes support on the pullback, so that relative under-performance of crude even as risk assets move to new highs is a concern," he said.


Crude oil gained a bit of momentum on Thursday to return to $45. However, the commodity has struggled to hit the $50 level that it had surpassed earlier this year.


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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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