Bloomberg

Car dealer chain AutoNation  (AN - Get Report)  was in full-blown breakout mode to end the week, surging 9% higher Friday thanks to better-than-expected first-quarter earnings.

AutoNation posted earnings per share of $1.01, besting the 90.5-cent profit that analysts were looking for, on average. And while that earnings beat is solid, it's not the whole story behind AutoNation's rally here.

After stumbling 9% in the trailing 12 months, shares of AutoNation look like they're carving out a long-term bottom. That means Friday's surge higher could be just the beginning of a much more long-lived bull move for this automotive retailer.

To figure out how to trade it, we're turning to the chart for a technical look:

AutoNation's bullish reversal isn't a flash in the pan - in fact, the price setup has actually been in formation since late last fall. The setup itself is a double bottom, a textbook technical reversal pattern that looks just like it sounds.

The double bottom is formed by a pair of swing lows that bottom out at approximately the same level, separated by a swing high that forms the breakout level to watch. For AutoNation that was the $39.50 price tag that shares ended Thursday's session ended at. Friday's earnings-induced blast higher puts shares in breakout territory.

That means now, with $39.50 in the rearview mirror, AutoNation has a relatively clear path for a re-test of prior highs set up at the $52 level. That's around 25% upside potential from where shares are currently trading.

Momentum adds some extra evidence to the bullish reversal in AutoNation: our momentum gauge, 14-day RSI, made a pair of higher lows as AutoNation's price action was putting in its pair of bottoms. That's a bullish divergence that confirms the pattern we're seeing independently on the price chart.

More intermediate term, a prior swing high at $43 could present a minor challenge for AutoNation's rally - but it's more likely a place where we'll see some brief consolidation following this week's price surge before the rally resumes.

Risk management remains key here, particularly with the broader market making new highs. The 50-day moving average is starting to look like a decent barometer for this stock's ability to hold a new uptrend. If AutoNation fails to hold above the 50-day, it makes sense to tap out.

Meanwhile, shares look primed to catch up with the rest of the market this spring.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.