Energy stocks tumbled Wednesday as oil sank after an eight-session win streak, leading Rich Ross to warn investors that there's only one level at which they should be buying into the sector at this point.
The group was the worst-performing one in the first half of 2017, and the Evercore ISI technician says that there are two main indicators to watch that will determine if energy is safe to get into again. On a one-year daily chart of the energy-tracking ETF (XLE), Ross says that since the start of the year, a "textbook definition of a downtrend" has plagued the sector.
But what's "interesting" about the downtrend line, according to Ross, is that since February it has run almost identically to the XLE's 50-day moving average. This leads him to conclude that both the 50-day moving average and the downtrend line both serve as "resistance," two lines that XLE has failed to surpass since February.
"Until we get back above this downtrend and back above this 50-day moving average, we do not buy it," Ross said Wednesday on CNBC's "Trading Nation," referring to the importance of the two lines.
Both lines are currently sitting around $67, which leads Ross to conclude that until XLE surpasses $67, investors should not buy energy.
XLE has fallen nearly 14 percent year to date, dragged down by oil, which has also dropped 13 percent so far in 2017.