EllTec Analysis

Glossary

The terms that come up most in EllTec analyses, explained in plain language. Inside an analysis, the first mention of a term in each section links here.

Technical analysis

Alternative scenario: A second, less likely interpretation of the wave structure, with its own levels. It becomes the primary scenario if price breaks the defined trigger level.
Corrective wave: A countertrend move, usually in three waves (A-B-C), that retraces part of the preceding impulse before the larger trend resumes.
Elliott Wave Theory: A method of reading markets as repeating wave patterns driven by crowd psychology: trends unfold in five waves in their direction (impulse) and correct in three waves (correction). The same pattern repeats on every timeframe, from minutes to decades.
Fibonacci confluence: A price area where several independent Fibonacci levels (and often other supports or resistances) cluster. Such zones are considered stronger than a single level.
Fibonacci extension: Price targets beyond the previous high or low (e.g. 1.618 or 2.618 times a prior wave), used to project how far a new impulse could run.
Fibonacci retracement: Price levels derived from the Fibonacci sequence (most commonly 38.2%, 50%, 61.8% and 78.6%) that measure how far a correction pulls back into the previous move. Corrections often stall near these levels.
Impulse wave: A five-wave move (1-2-3-4-5) in the direction of the larger trend. Waves 1, 3 and 5 move with the trend, waves 2 and 4 correct; wave 3 is never the shortest, and wave 4 normally doesn't overlap wave 1.
Invalidation level: The price at which the primary wave count is proven wrong. If it is breached, the analysis switches to an alternative scenario instead of hoping the original view still works out.
Seasonality: Price tendencies that recur at certain times of the year, measured over many years. Seasonality is a tailwind or headwind, not a forecast on its own.
Supercycle: A very high wave degree in Elliott Wave terms, typically spanning decades. A supercycle wave is made up of several smaller cycle waves.
Support and resistance: Price areas where buying (support) or selling (resistance) has repeatedly stopped a move. Once broken, support often turns into resistance and vice versa.
Target zone: A price range, not a single price, where a wave is expected to end — derived from Fibonacci relationships and the wave structure.
Volume analysis: Reading traded volume alongside price: rising volume confirms a move, fading volume questions it, and high-volume price areas often act as support or resistance.

Fundamentals

Debt-to-equity ratio: Total debt divided by shareholders' equity — how much of the business is financed with borrowed money.
EBITDA: Earnings before interest, taxes, depreciation and amortization — an approximation of operating profit before financing and accounting effects.
EV/EBITDA: Enterprise value (market cap plus net debt) divided by EBITDA. Compares companies independently of how they are financed.
Forward P/E: The P/E ratio based on analysts' expected earnings for the next twelve months instead of past earnings.
Free cash flow: Cash from operations minus capital expenditure — the money a business generates that is actually available for dividends, buybacks or paying down debt.
Gross margin: Revenue minus the direct cost of the goods or services sold, as a share of revenue. Shows pricing power and production efficiency.
Market capitalization: Share price × number of shares outstanding — what the market currently values the whole company at.
Operating margin: Operating profit (EBIT) as a share of revenue — what is left of each unit of revenue after all operating costs.
P/E ratio: Share price divided by earnings per share: how many years of current profit investors pay for. Only meaningful compared with the company's history, its peers and its growth.
Return on equity (ROE): Net profit divided by shareholders' equity: how efficiently a company turns its owners' capital into profit. High debt can inflate it.

Macro & correlations

Correlation: How closely two assets move together, from +1 (always in the same direction) to −1 (always opposite). Correlations change over time and are no proof of cause and effect.
Global liquidity: The total money and credit available in the financial system worldwide, driven by central-bank balance sheets and interest rates. Rising liquidity tends to lift risk assets.
US Dollar Index (DXY): Measures the US dollar against a basket of six major currencies (mostly the euro). A strong dollar tends to weigh on commodities, emerging markets and crypto.

Risk & trade planning

Drawdown: The decline from a peak to a subsequent low, in percent. Shows how much pain a position or portfolio has had to sit through.
Risk score: EllTec Analysis' rating of a setup's risk from 1 (low) to 10 (high), combining fundamentals, valuation, volatility and how clear the wave structure is.
Risk/reward ratio: The potential gain to the target divided by the potential loss to the stop or invalidation level. A ratio of 3 means three units of upside per unit of risk.
Stop-loss: A predefined price at which a position is closed to cap the loss — usually placed beyond the invalidation level.
Take-profit: A predefined price at which (part of) a position is sold to lock in gains. Staged exits sell in several steps across the target zone.

Crypto

Layer 2: Networks built on top of a base blockchain such as Ethereum that process transactions cheaper and faster, then settle the results on the base chain.
Proof of stake: A way for a blockchain to agree on its state in which validators lock up (stake) coins as collateral instead of spending energy on mining; they earn rewards and can lose part of their stake for misbehaving.
Spot ETF: An exchange-traded fund that holds the asset itself (e.g. bitcoin or ether) rather than futures, giving investors exposure through a regular brokerage account.