Oil is flashing a ‘significant buy signal’

Pro: Oil setting up for a rally back to $51

Oil's bounce over the past few sessions could be a sign of future gains.

Crude traded slightly lower Tuesday afternoon at $42.71 a barrel, following a substantial bounce on Monday on news that members of the Organization of the Petroleum Exporting Countries planned to hold informal talks in September.

Even if the oil heavies don't elect to freeze supply, some analysts believe this is still the right time to bet on oil.

"I think it's a great buy," at these levels, Tim Seymour, managing partner at Triogem Asset Management, said Monday on CNBC's "Trading Nation."

"We've obviously bounced 8 percent off these lows. Sentiment was extremely strong, people have been staring at the rig counts; I don't think it's a lagging indicator; ultimately we are in a place here, you heard the comments from OPEC — they actually think the market's correcting itself," Seymour said.

The organization, which includes Qatar, Saudi Arabia, Nigeria and Venezuela, last met in Doha, Qatar, in April, when it failed to agree on halting output amid sagging crude prices. The lack of agreement sent crude prices plummeting more than 6 percent.

Ari Wald, technical analyst at Oppenheimer, agrees that the charts suggest oil prices will stay afloat.

"In fact, you're really having your most significant buy signal since oil started its decline back in June, and that buy signal was a key reversal last week," Wald said Monday on "Trading Nation," pointing to a chart of crude trading below support at its 200-day moving average.

"Bears had all the reasons to really press the sell buttons there; they couldn't do it, bulls came back, you had a strong rally into the close there. I think that's marking an exhaustion of selling pressures. I think it's marking a turning point," said Wald. He said he believes this "turning point" sets up a potential springboard to higher levels, particularly around the $51 resistance mark.

"I think oil is very interesting as a buy here, especially because sentiment, remember, last week was about as low as it's been" since the commodity's recent lows, Seymour said.