SPDR Financial Sector $XLF Blue Box Area Offers A Buying Opportunity

Hello everyone! In today’s article, we’ll examine the recent performance of SPDR Financial Sector ($XLF) through the lens of Elliott Wave Theory. We’ll review how the rally from the April 2025 low unfolded as a 5-wave impulse followed by a 7-swing correction (WXY) and discuss our forecast for the next move. Let’s dive into the structure and expectations for this ETF.

5 Wave Impulse + 7 Swing WXY correction  

$XLF 4H Elliott Wave Chart 10.16.2025:

In the 4-hour Elliott Wave count from Oct 16, 2025, we saw that $XLF completed a 5-wave impulsive cycle at blue (3). As expected, this initial wave prompted a pullback. We anticipated this pullback to unfold in 7 swings, likely finding buyers in the equal legs area between $50.98 and $49.25.

This setup aligns with a typical Elliott Wave correction pattern (WXY), in which the market pauses briefly before resuming its primary trend.

$XLF 4H Elliott Wave Chart 10.20.2025:

The latest 4H update shows that the ETF bounced as predicted allow longs to get risk free. Currently, it is trading higher in wave 1 of (5) and looking for a pullback in wave 2 before higher again. A break above 54.51 will open the next leg higher and negate any lower prices.

Conclusion

In conclusion, our Elliott Wave analysis of Financial Select Sector ($XLF) suggests that it remains supported against October 2025 lows. As a result, traders should buy the dips and monitor the $55–$56 zone as the next potential target. In the meantime, keep an eye out for any corrective pullbacks that may offer entry opportunities. By applying Elliott Wave Theory, traders can better anticipate the structure of upcoming moves and enhance risk management in volatile markets.

Source: https://elliottwave-forecast.c...