Crude has almost doubled off its bottom from the beginning of this year, rising from $26 a barrel to over $50 and making energy one of 2016's best performing sectors on the S&P 500. One technician sees even more gains to come.
"I don't think the run is over," Rich Ross said Wednesday on CNBC's "Trading Nation." Energy stocks have rallied more than 14 percent this year.
Looking at a long-term chart of the XLE ETF that tracks the energy sector, Ross noted a recent break in a downtrend line that's been in place since 2009. "That's your first sign that the trend is turning," Evercore ISI's head of technical analysis said. Furthermore, he pointed to a big head and shoulders, which he expects to serve as a strong base of support.
"The key to the pattern is that neckline coming in right at current levels at $70," he said. "I think a breakout above that neckline, which I do anticipate, will generate a strong buy signal with significant upside signals from current levels, and that takes you higher in the XLE." The XLE briefly breached the $70 level Wednesday before falling into negative territory for the session.
"We continue to think crude goes higher, energy goes higher along with it, and this big head and shoulders base of support that you see here is going to provide the foundation for that next leg up," he added.