Energy stocks have hit a bottom — here’s why: Trader

It's been a tough year for energy investors.

The S&P 500 energy sector ETF, the XLE, has lost more than 20 percent of its value in 2015 as crude and other commodities have tumbled to multiyear lows. But for investors fishing for a bottom, one contrarian trader says we may have just witnessed a very bullish pattern on the charts.

Read MoreThe 4 energy stocks trading at decade lows

"I see a possible triple bottom here at around $60," said AlphaShark Trading founder Andrew Keene, who was looking at a chart of the XLE. A triple bottom formation is when an asset falls to the same point three times and bounces. Technicians often view the pattern as the reversal of a long-term downtrend.

"We hit this [$60] level back in August and bounced, then in October and bounced and I think we are going to bounce again," he told CNBC's "Trading Nation" on Tuesday.

Read MoreWill the oil plunge derail stocks into year-end?

Crude oil prices briefly fell below $37 for the first time since 2009 this week before staging a stunning reversal, which gave energy stocks a boost. The XLE was up more than 1 percent midday Wednesday.

For Keene, the rally could continue, albeit slowly, through the first quarter of next year. "I think the XLE could rally to a measured move target of $70 by March," he said. That's a 12 percent rally from the ETF's current price of around $62.50 and corresponds with its November high.

Keene's call comes amid an overwhelmingly bearish picture for the oil market, as supply and demand concerns have created a mass of volatility in the space. While the potential for a near-term bounce is possible, Wall Street consensus still expects lower for longer.

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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.

Follow Michael Santoli on Twitter @michaelsantoli

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