Bloomberg News

The energy sector is catching its breath again in 2019, following a historically bad year in 2018.

Energy - and specifically oil - spent Q4 in freefall, as crude prices sold off nearly 50% from peak to trough. That selloff was especially jarring because it included the longest losing streak for crude oil on record, and came at a time when asset correlations were spiking as just about everything tumbled in lock-step.

As oil prices rebound this year, the logical question is whether we're just seeing a relief rally in the middle of a longer-term downtrend or whether we can expect oil prices to keep on moving higher from here.

The good news for energy bulls is that oil looks likely to continue tracking higher this winter.

To figure out why, we're turning to the chart for a technical look. For that, we turn to the U.S. Oil Fund (USO - Get Report) , a popular ETF that tracks crude oil prices:

Despite the brutal selling in the final quarter of 2018, the year wasn't all bad for oil - in fact, crude prices were in a very well-defined uptrend for much of the year, only violating trendline support at the end of October, in the early stages of the selloff.

More recently, though, shares have been carving out a pretty textbook bottom, breaking out of an inverse head-and-shoulders pattern within the last two weeks. That price setup indicates exhaustion among sellers - and it triggered with a breakout through $11.50 in USO.

Don't let the silly name fool you; the head-and-shoulders is an effective trading setup. An academic study conducted by the Federal Reserve Board of New York found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant."

Since breaking through $11.50, USO has been consolidating just above newfound support at its neckline. That's constructive, since it's giving the market the chance to absorb some of the extreme momentum changes in oil prices.

It's worth noting that energy isn't the only asset that's looking "bottomy" via an inverse head-and-shoulders setup. Plenty of other asset classes look similar right now. That's a little bit of a caution flag, given that it means correlations remain extremely high right now. But in the context of Q4's broad selling, it's not completely surprising that we're seeing a similarly broad reversal in 2019.

Long term, it finally looks like a good time to turn bullish on oil prices now. The high-probability trade for crude is up and to the right.

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