Another spill in oil prices this week has energy stocks in the red.
The XLE energy ETF has fallen more than 1 percent since Monday, on track for a second week in the red. The group has plummeted into a bear market, having fallen more than 20 percent from its 52-week highs set in May.
Bill Baruch, president of Blue Line Futures, says the charts suggest both good and bad for the energy sector.
"For the bad news first, you have multiple failed breakouts out above that late 2016 high," Baruch said on CNBC's "Trading Nation" on Wednesday. "The next thing was you had the death cross, the 50-day moving average moving below the 200-day moving average."
To the good news, Baruch says its next move could be technically significant and suggest a bigger breakout.
"You have a double bottom right here at a crucial technical level — $61.50 – double bottoming against that mid-2017 low. Given that, I have to give it a shot down here," said Baruch. "But if that level gets taken out, look out below."
The XLE ETF came close to $61.50 during a sell-off earlier this month. It has not broken that level since April 2016.
After its three-month slump, the sector now offers some hidden value gems, says Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management.
"It's almost been the forgotten sector this year. It's traded negative returns and the volatility and the bleeding have come from a lot of the geopolitical conversations and a lot of the headline risks. We think there's fundamental value in the sector," Bapis said on "Trading Nation" on Wednesday.
Bapis highlights EOG Resources and Exxon Mobil as two energy stocks that trade with a low multiple and offer a healthy dividend yield. EOG trades at 15 times forward earnings, while Exxon has a 14 times multiple.
"We've got to get rid of headline risk and some of the geopolitical risk and then it's off to the races," added Bapis.
EOG has dropped 12 percent over the past three months, while Exxon is down 7 percent. The XLE ETF has fallen 15 percent over that same stretch.
Disclosure: Michael Bapis personally owns EOG and XOM.