This is a 'game changer' for crude: Top technician

Crude settled down 1.5 percent Wednesday after surging to a 10-week high early in the session. Oil is now up 28 percent from its late August low, and one top technician insists the rally is just getting started.

"The big story in the fourth quarter thus far is this surge in energy," Rich Ross said Wednesday on CNBC's "Trading Nation." Energy is the best-performing S&P sector so far this quarter, up more than 10 percent as oil has rallied 7 percent in the same period. "I don't think it's too late to take advantage of this recent surge and play for an extension of this move."

Read More The time has come to buy energy stocks: Strategist

Looking at a chart of the OIH, the ETF that tracks oil service stocks, Ross, head of technical analysis at Evercore ISI, noted a recent completion of a "very bullish double bottom" formation. This is a pattern technical analysts often recognize as a reversal in trend, where a stock or ETF will fall to a low, retest that low and then move higher.

"Admittedly we saw a similar double bottom earlier this year that produced a nice rally but it ultimately failed," said Ross, whose work was recently recognized by Institutional Investor's 2015 All-America Research Team. "At the very least [this time] I think we are set up for a tactical move coming off this double bottom."

Read MoreInvestors tread carefully despite oil rally

For Ross, there are two key levels to watch on the chart: resistance, which comes in at $32, and then the 200-day moving average around $34.

"I think we will retest $32 and a break above that should get us to that moving average," he said. "We haven't seen the north side of the 200-day for over a year, so clearly a break above $34 is a game changer." That would be an 8 percent move from the Wednesday afternoon trading price of around $31.40.

"I think crude oil and the OIH by extension have what it takes to move higher from here," added Ross. "Take advantage of this early quarter strength."

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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 CNBC and 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.

Follow Michael Santoli on Twitter @michaelsantoli

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