Hello Traders! Today, we’ll dive into the 4H Elliott Wave structure of SPDR Health Care ETF ($XLV) and explain why the corrective pullback could present an excellent buying opportunity. Let’s analyze the price action and forecast the next steps.
5 Wave Impulse Structure + ABC correction
$XLV 4H Elliott Wave View February 11th 2025:
The 4H Elliott Wave chart for $XLV reveals key patterns based on Elliott Wave Theory. This analysis provides a roadmap for traders to plan their next steps effectively.
Breaking Down $XLV’s Future Price Action
Since the December 19th 2024 low, $XLV has followed a classic 5-wave pattern, indicating a bullish trend. Here’s what has happened so far:
- Wave (A) ended on February 6, 2025, marking the end of the 5-wave pattern.
- Afterward, the ETF is expected to pull back in a 5-wave correction, eventually bottoming out at wave A.
- $XLV is then expected to bounce and fail, completing wave B.
- Afterward, wave C of wave (B) is expected to take place, eventually bottoming out in the Blue Box, which ranges from $143.93 to $140.80.
The Blue Box: A Key Area to Watch
The Blue Box represents a crucial zone where buyers could step in and start the next rally toward wave (C). Typically, corrections occur in 3, 7, or 11 swings, so traders should remain cautious and manage their risk.
Here’s What to Keep in Mind:
- Stay above the Invalidation Level: As long as the price holds above $135.82, the bullish outlook remains intact. A drop below this level would require a new analysis.
- Avoid Short Selling: The anticipated decline toward the Blue Box might tempt some to sell, but this carries risks. A truncation could occur, cutting the move short. Instead, watch for signs of a bounce in the Blue Box as a signal for the next rally.
Smart Risk Management
Because the correction could extend into 7 swings, consider taking partial profits on the first bounce. By doing this, you protect some gains and make your remaining position risk-free, setting yourself up for the potential wave (C) rally.
Why Elliott Wave Theory Points to a Rally
Elliott Wave Theory helps traders understand market trends and sentiment shifts. In this case, it suggests that once wave (B) finishes, $XLV could start a new upward leg, aiming for fresh highs with wave (C).
Conclusion
With $XLV nearing a crucial support zone in its Elliott Wave cycle, traders should stay alert for a potential rally. As long as the stock remains above the $135.82 level, the chances of a bullish move increase. Use this analysis to guide your trading strategy and anticipate what’s next.
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